More second rate research by Conbank.
1) They should also do a comparison of iron ore prices with prices of CR&HR coils, plates, stainless steel... you'll find that rebar has shown the weakest price growth in the last 3 months.
2) Steel Inventory held by steel mils, traders and construction firms is very low (as indicated by their chart), this suggests steel mills need to up their production for inventory levels to return to average levels.
3) Steel production is running at a 12% yoy increase from 2011 to 2012. The latest daily reports show production increases of 20% yoy.
4) The crucial factor driving the current market is the exports. Exports of steel from China has INCREASED 50% plus for many steel products yoy. Most of the increases are attributable to Indonesia and India.
More Steel is being produced in China and a bigger proportion of this is being exported (hence why we're still seeing dwindling inventory numbers; and a mismatch between downstream uptake (steel consumed) within China and the levels of iron ore being imported).
Why even bother with Conbank or any bank forecasts? they continually get it wrong and change their predictions on a weekly basis. First it's good then it's bad and then it's good again... you'll be whipsawed out of the market following any one of them. If you're wondering why companies like AGO/GRR/MGX/FMG are underperforming the underlying real market... look no further than the disclosure statement in that research report. Conbank acts as an advisor to many funds, if they put out a bleak report then funds under their advice are obligated to sell (Conbank receives fees for this service and pockets extras when the FUA sell or buy based on Conbank's advice).
I'm a terribal spelleh, so do fogrive for typoes.
Add to My Watchlist
What is My Watchlist?