This morning I received a refreshingly direct research note from Asian research specialists J Capital:
Iron Ore Poised for Steeper Fall
$100 Coming Soon
We are expecting a fall in steel production to the August seasonal low two months early, meaning June should see about 7 mt less production than May. That is equivalent to a month-on-month drop of 10 mln tons in iron ore. This is curtain time for iron ore: prices should slide from here in toward $100 and then possibly not come back.
Any questions or comments, please contact …
No misconstruing the thrust of that piece of research.
It’s worth remembering we have been here before. August 2012 saw China bears like yours truly rolled out to explain the slump in iron ore prices to less than $90 per tonne. A few months later it was trading back at $150 again.
My gut feel is that this time around it’s permanent. The last selloff had an element of panic about it. This time the iron ore price falls day by day as analysts rationally update their estimates of supply, demand and the Chinese economy. The same holds true for the Aussie dollar. I couldn’t believe it held up as long as it did but – yes, forecasting currencies is a mug’s game – I doubt we’ll see it break the buck again for a very long time.
Functional cookies Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.