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Can't Sustain +$120/ton Levels, China Property Developments Eyed

IRON ORE
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Active SGX iron ore futures sit just off recent highs, last near $119/ton. Earlier we got to above $120/ton, fresh multi month highs. We are now +25% above early April lows.

  • Broader metal gains have aided sentiment, with copper tracking to fresh record highs a positive. The longer run correlation between the two metals remains positive.
  • Arguably more important has been positive tones around China's property market, with policy efforts to boost the sector prominent in recent months. China Rebar prices are also comfortably off recent lows.
  • Still, with some analysts indicating the property measures recently announced not enough to turn the tide (particularly from a buy back standpoint at the local govt level), we may have to see further goods news on the property front/China macro outlook to justify higher iron ore prices.
  • The CSI 300 real estate equity is consolidating after a strong run higher as well.
  • Note mid Feb highs for iron ore sit at $127.75/ton in terms of upside targets. Note the simple 200-day MA has been a support zone since mid April. That level is around $113.85/ton.
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Active SGX iron ore futures sit just off recent highs, last near $119/ton. Earlier we got to above $120/ton, fresh multi month highs. We are now +25% above early April lows.

  • Broader metal gains have aided sentiment, with copper tracking to fresh record highs a positive. The longer run correlation between the two metals remains positive.
  • Arguably more important has been positive tones around China's property market, with policy efforts to boost the sector prominent in recent months. China Rebar prices are also comfortably off recent lows.
  • Still, with some analysts indicating the property measures recently announced not enough to turn the tide (particularly from a buy back standpoint at the local govt level), we may have to see further goods news on the property front/China macro outlook to justify higher iron ore prices.
  • The CSI 300 real estate equity is consolidating after a strong run higher as well.
  • Note mid Feb highs for iron ore sit at $127.75/ton in terms of upside targets. Note the simple 200-day MA has been a support zone since mid April. That level is around $113.85/ton.