Quote:
Stockyards in Chinese terminals have provided a useful buffer to absorb excess seaborne iron during the early stages of structural oversupply; inventories have increased by 39Mt since October 2013. With iron ore port stocks at record levels, could stockpiles be near saturation? Based on a sample of 15 large bulk terminals, our analysis suggests that Chinese port stocks are currently using 89% of available storage capacity. On that basis, Chinese port stocks could be c.14Mt away from hitting a physical constraint on storage space. This would imply that further port restocking can only absorb a limited amount of additional ore, and Chinese ports will no longer act as a safety valve in an oversupplied market. In other words, the ability to cushion the impact of structural oversupply via inventory build-up is now quite limited, so marginal producers are now fully exposed to the structural oversupply in the market. Our 2015 price forecast remains unchanged at US$80/t.
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