Chinese steel producers say don’t count on a lasting iron ore rally | afr.com

From Jasmine Ng at AFR:

“Don’t let wild, short-term price swings distract us from our analysis of the market,” Li Xinchuang, deputy secretary- general of the China Iron & Steel Association (CISA), said after iron ore surged on Monday by the most on record.”How can the rally possibly be sustained?” he asked.

…..Steel demand in China, which contracted 5.4 per cent last year, will shrink an additional 3 per cent this year, he said. Port inventories of iron ore have expanded 13 per cent in the past year, according to Shanghai Steelhome Information Technology Co. The global seaborne glut is estimated at 45.8 million tonnes this year and 34.1 million tonnes in 2017, Morgan Stanley said in a report last month.

You would expect Li to be calling for an end to the rally. But he does have a point: supply is expanding while production is contracting. You don’t have to be a metallurgist to figure the outcome.

Source: Chinese steel producers say don’t count on a lasting iron ore rally | afr.com

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