In my post yesterday I raised the question about the ratio of port inventories held by traders as opposed to mills. Have the port stockpiles been increasing mainly as a result of mills destocking off the back of credit tightening, which might signal a return to purchasing shortly as mill inventories hit lows?
I couldn't find any data in regards to that yesterday but today an article of that very nature is on Macro Business. It's worth a quick look.
"Courtesy of Credit Suisse, here was the state of inventories on May 9 (the latest update):....
...25 days of coverage is low by historical standards (and it’s probably lower now) but there are reasons the believe it’s not so low in longer term context."
http://www.macrobusiness.com.au/2014/05/how-low-will-iron-ore-go-2/
The article is far from bullish but their opinion seems to be that we are probably very close to the bottom for now.
We know at these prices there is a lot of Chinese production that is unsustainable. The key question is how long will they remain producing at a lost before the eventual shut downs come and if that will happen before the large ramp up of Australian production comes on line?
At the moment I have the feeling that it will be a fall in the $A relative to the $US rather than a big increase in the Fe price that will provide ample margins for Atlas into the future.
Yeatesy.
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