china iron ore inventory levels?, page-3

IO price recovery unfolding back to >US$130/t

Moves such as yesterday’s in spot rarely come as one-offs, however, so you can expect this to run for a while. Texture from Reuters:

“Traders are trying to restock steel in anticipation of consumption going up in April,” said Zhou Ting, analyst at Jinrui Futures in Shenzhen.

Steel demand in China usually strengthens in April and May along with construction activity, while investors are also anticipating the government will boost the economy following recent weak manufacturing and trade indicators.

“There’s some expectation of increased investment in infrastructure to prevent the economy from slowing further. The aim is to boost consumption in the long run, but for the economy to expand in the short term, the government needs to continue to invest,” said Ting.

Steel demand should improve but I’m not sure production will need to very much. But that’s neither here nor there today with stimulus and supply disruption in the air anything is possible. If mills restock materially it’ll be worth $20-30 to spot.

I still expect modest stimulus and tight credit but it’s possible that mills will expect a repeat of 2013 and will get more aggressive.