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."
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.
AGO Price at posting:
74.5¢ Sentiment: Hold Disclosure: Not Held
