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To Fresh Multi Month Lows Amid Onshore Steel Headwinds

IRON ORE

The active SGX iron ore contract is tracking to fresh multi month lows in Wednesday trade. We were last near $96/ton. Early April lows came in close to $93.50/ton in terms of potential downside targets.

  • Sentiment is being weighed by broader concerns around the steel outlook in China. The Chairman of China Baowu Steel Group (the world's largest producer) warned that the steel industry faced a severe industry crisis (see this BBG link).
  • This likely reflects broader economic headwinds for China, particularly in the property sector. Yesterday's July credit figures also painted a fairly bleak picture in terms of consumer and business loan demand. Onshore China equities are mostly weaker today as well, bucking the positive trend seen elsewhere in the region.
  • Steel related futures are down around 2.5% in onshore China trade today. Rebar futures are at fresh cycle lows.
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