Iron ore's seasonal performanceThe below data looks at the...

Iron ore's seasonal performance

The below data looks at the average performance in the corresponding periods.

In the past fifteen years:

• December performance: +10.6%

• Median December performance: +9.36%

• % of the time December is positive: 93% or 14 out of 15 times

• November through to next February: +18.3%

Source: Market Index

In the past 10 years:

• December performance: +9.4%

• Median December performance: +8.81%

• % of the time December is positive: 90%

• November through to next February: +14.4%

In the past five years:

• December performance: +15.2%

• Median December performance: 18.2%

• % of the time December is positive: 100%

• November through to next February: +21.1%

How does iron ore perform after a 'Big November'

There's often a lot of discomfort when it comes to buying something that's rallied in a rather vertical fashion.

Buying an asset that's already rallied significantly increases the risk of purchasing it at its peak, potentially leading to a 'staircase up and elevator down' scenario. This begs the question: How does iron ore perform after a big November?

Our data set shows five instances where iron ore prices rallied at least 10% in November. Here are the subsequent performances:

	Year	November % Chg	December % Chg
2009	14.1%	15.4%
2010	11.9%	1.4%
2011	10.7%	5.7%
2016	15.7%	12.2%
2017	15.5%	4.7%

The average gain in December was 7.9% versus the 11.2% of all other years. While a little bit softer than the average of all other years, the data suggests that November momentum has the tendency to carry over into December.

The state of play in China

Most of China's recent economic data prints have come in below market expectations. But every downbeat headline tends to come with a 'more stimulus expected' attached. Some recent data points of interest include:

• China's manufacturing PMI contractedfor a second straight month in November and at a quicker place, down to 49.4 in November vs. analyst expectations of 49.7 (Reuters)

• Profits at China's industrial firms rose at a slower pacein October, up 2.7% year-on-year from an 11.9% increase in September, suggesting more policy support from Beijing is needed to help shore up growth (Reuters)

• House prices in major Chinese cities fell for a fourth straight monthin October, flagging the steepest drop in nearly nine years as demand continues to slump (SCMP)

Citi says 'buy the dip'

Citi analystsupgraded their 3-month price forecastfor iron ore to US$140 a tonne from US$120 a tonne on 22 November.

“We now expect in our base cases that China will likely increasingly push towards fiscal expansion to engineer investment-led growth, and this time with a focus on urban village redevelopment/affordable housing to support overall property market related activity in 2024," the analysts said.

"Any dip in iron ore from here through to at least Chinese New Year could represent a buying opportunity."

On a separate note, Chinese steel prices have rebounded strong in November and this momentum is "expected to extend to December, supported by resilient steel demand from both domestic and international markets, as well as firming raw material prices," according to Mysteel's chief analyst Wang Jianhua.

"The recent rises in China's interbank lending rates indicate that capital needs are recovering in domestic markets, which means domestic enterprises' operations have turned more active," Wang added, noting that this is likely to drive up domestic steel demand.