AGO (ASX) daily wrap

Richie's missing in action.

Today's summary...

Spot IO

Up another +$5/t from yesterday to $142/t, earlier in the day bids were at +$3/t and picked up even more as the day progressed.

Domestic ore prices and Port prices were also up $2-$4/t

Two (small) projects were approved, one in Xinjiang, the other in Golmud, Qinghai. Both in the western reaches of China. Following on from the theme, that io production in west China is growing while mines in the East are being shut.

Steel

Up, futures/billet/longs/flats all picked up another notch today... And then upped another notch after lunch time.

Steel companies

Despite the media led gloom about steel companies suffering, Benxi and Xining Steel both reported HY profits had increased 15 to 20% from last year. Anhan steel turned a CNY 4 billion (statutory) loss into a CNY 700 million profit.

Inventories

Steel inventories held at mills continue to slide. Longs inventories are about 0-5% below this time last year. Flats inventories are about 5-20% below this time last year. They'll need to increase production even further, the steel is flying out the door.

IO inventories held at mills are climbing up. Up 10% this week... on average they have 16 days of io supplies... the cycle usually bottoms at 13 days and peaks at 28 days. The restocking phase has a long way to run... at the current rate, another 3 months of stocking up on io supplies. [LOL, judging by the morning sell off on io companies, ..., I dunno, people are retards? we've barely lifted from ground zero]

IO inventories held at ports declined by 1mt this week after 4 months of stable activity. At the current market dynamic, seaborne will need to pick up 50mtpa just to stem the flow.

Macrobusiness...

Did you guys read the admission that they've got no idea about what's going on?

"So what’s going on? As I warned last week, when iron ore runs, get out of the way."

quotes from last week:
"I still expect prices to gradually fall away on seasonal weakness with the possibility of sharp falls."
"More falls for spot ahead in my view" (After spot registered a 20c drop)
"With swaps pricing where it is you would expect the spot price to be trading somewhere around $120 or just under." (spot at $130... and still with the delusion that swaps dictate future pricing trends)
"Rebar futures also fell sharply. Looks like the top is in... In my view the likelihood remains that we’ll see a solid fall in Q3... Long term price prospects are unchanged and now is a good time to building shorts" (io spot at $131)
"I could see prices drifting lower by $10 or so over the next few weeks." (io spot at $132)

As I've argued many times, don't follow second rate analysis from kids who barely scraped through kindergarten.