Via Bloomberg
I came across a Bloomberg article yesterday making the case that the foundations that supported Iron Ore's rally are starting to crumble. The chart below shows the rise of Iron Ore below from January to July this year (white line).
Iron ore to descend as fast as it rose?
The first half rally was driven by an increase in demand and a supply shortage. That outlook now looks different. A key indicator for flows are port holdings in China and they have broken higher after a long run of declines. (blue line on the chart above). Overall the volume levels expanded 2.6% last week, according to steel home figures, the biggest rise since February. Inventories of Australian ore surged the most since March 2018, rising for a fourth week in a row,
Mainland mills are also helping prices lower. A Bloomberg guage of how much steelmakers are making in China is headed for a third monthly fall and and has now drawn back to the lowest level since November.
Room for Iron ore to move to $100
Taken together there is room for iron ore to move lower as the second half of the year doesn't hold the same attractive circumstances as the first half. $120 was the top for Iron ore futures in Singapore in early July and are now around the $115 level. A drop to $100 would be the next stop if the situation remains the same.
