Courtesy of Mish.
China's iron ore inventories have plunged like a rock as has the price of iron ore itself. Bloomberg reports Iron Ore Holdings at China’s Ports Drop Below 100 Million Tons.
Iron ore inventories at ports in China fell below 100 million metric tons for the first time since February as the holdings in the world’s largest buyer dropped for a seventh week to post the longest run of declines in two years.
About 71 percent of the port inventories are owned by mills and the remainder belongs to traders, Steelhome said in the report. The holdings, tallied at 44 ports, are sufficient to support steel-making in China for 30.37 days, it said.
Iron Ore Down 50% Last Year
The Australian Business Review reports Iron Ore Price Reverse Gathers Pace, With New 2 percent Decline
At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US68.50 a tonne, down 1.9 per cent from its previous close of $US69.80 a tonne, and just 4 per cent above the five-and-a-half-year low of $US65.70 reached just prior to Christmas.
At the start of the year optimism in the iron ore sector was beginning to grow as the commodity staged a recovery of almost 10 per cent from its December trough, but once again fears of a dead cat bounce are surfacing as oversupply worries dampen investor interest.
Iron ore lost about 50 per cent over the course of last year as surging supply could not be met by a similar lift in demand and expansion plans from major producers threaten to exacerbate the oversupply situation in 2015.
The latest price retreat weighed on industry heavyweights Rio Tinto and BHP Billiton in London trade overnight, with stock in the two miners falling 2 per cent and 1.8 per cent, respectively.
It follows a broad retreat in the stock prices of iron ore miners on the ASX yesterday, with Fortescue Metals Group sinking 3 per cent alongside heavier falls of 8 per cent and 15 per cent for BC Iron and Atlas Iron.
Yuan Observation
The plunge in iron ore (base metals in general) brings up an interesting observation.
Just a few years back, hyperinflationists thought it would have been wise for China to dump its US dollar reserves for virtually anything, but especially iron, copper, and oil. I took the other side of the debate.
Flashback November 19, 2012: How Sustainable are China's Copper, Cotton, Steel Imports? What About Chinese Purchases of Canadian and Australian Real Estate? Fresh Thinking on Balance of Payments
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