Commodities

It’s always the same at this stage of the cycle, only this time it is secular, not cyclical.

So much for the Cat5 monster.

Thar she blows.

So says ANZ.  The US produces around 80mt of crudes teel, which falls short of its consumption needs by 25-30mt. Its import reliance is around 12-15% of apparent consumption. Canada is once against the biggest source of its total imports at 23%. Other sources include Mexico (16%), Brazil(13%), and theRepublic of Korea(9%).

Beware the LNY distributions, but Chinese property appears to have faded out.

Steel profitability is just about gone.

The iron ore jaws resemble a yawning hippo now.

Some pretty impressive jaws are opening in the ferrous complex.

I’m not sure where the rebar rally is coming from.

Ferrous markets are rallying into LNY.

The steel and iron ore jaws are looking pretty attractive for a May seasonal short.

The ferrous complex is following its typical seasonal pattern leading into Lunar New Year.

It is amusing to watch, in the usual dark way, how China keeps promising to decarbonise steel while in actuality pumping ever more carbon.

Steel prices are continuing to show some life. Not so iron ore. CISA steel mill output for the first 10 days of January was strong. However, that is unlikely to last beyond the seasonal rebuild. RIO confirmed strong guidance (though its recent record has been shit).

The iron ore price has lifted in recent days with support from Pilbvara disruptions and daily declarations for yawnulus in China.

Chinese December steel exports continued their strong run at 9.7mt, up 26% year on year, driven in part by tariff frontrunning.

Friday’s Chinese yawnulus was greeted by another bounce in iron ore but the reality of it is better reflected in flatlined rebar futures.

Iron ore spot is hovering around $97 as it chases relentlessly weak rebar futures lower.

This is how corrupt Australian policymakers are.

I have been hoping that iron ore will get irrational and we are fast getting there as the stimmies metal flies.

Iron ore prices are hovering above $100 while markets are in a neutral position.

You can’t keep a good Pavlovian dog down.

As is so often the case, iron ore is busy killing the golden goose by running away from steel prices.

Morgan Stanley with the note.