{"id":2139,"date":"2023-11-23T05:42:06","date_gmt":"2023-11-23T05:42:06","guid":{"rendered":"https:\/\/economicherald.net\/?p=2139"},"modified":"2023-11-23T05:42:06","modified_gmt":"2023-11-23T05:42:06","slug":"monsters-of-rock-as-china-moves-to-kill-speculation-some-folks-think-the-iron-bull-run-can-continue","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=2139","title":{"rendered":"Monsters of Rock: As China moves to kill speculation, some folks think the iron bull run can continue"},"content":{"rendered":"

\u00a0<\/p>\n

Citi upgrades short-term iron ore forecasts on China property rebound hopes<\/strong>
\nBut, China\u2019s NDRC cautions against speculation (wink,wink), halting runaway prices<\/strong>
\nCommbank says Chinese steel consumption hopes may be \u2018overly-optimistic\u2019<\/strong><\/p>\n

\u00a0<\/p>\n

It\u2019s been the counter-intuitive rally to outfox all of the critics this year, with tight supplies and optimism around China\u2019s expected economic stimulus and infrastructure investment sending iron ore prices to super high levels.<\/p>\n

At over US$130\/t, the world\u2019s most traded commodity is trading at over six times the cash costs of the world\u2019s largest iron ore producers, portending some staggering profits in next February\u2019s half-year results.<\/p>\n

Now, another investment bank is emerging to say the bull rally could run even harder, with Citi upgrading its short-term iron ore forecast to US$140\/t. They haven\u2019t been that high in well over a year.<\/p>\n

A big factor is the fact China\u2019s iron ore stockpiles are around 7-year lows, with hopes that the depressed property market which has underpinned concerns for the future of Australia\u2019s largest commodity trade \u2014 almost 900Mtpa \u2014 could begin its turnaround in 2024.<\/p>\n

Citi placed a year-end target on iron ore of US$130\/t just three weeks ago.<\/p>\n

It grinds sharply against the warnings of economists have the big banks, most of whom had year-end price targets of around US$100\/t on the Pilbara\u2019s red dirt.<\/p>\n

\u00a0<\/p>\n

\u201cOverly-optimistic\u201d: Commbank<\/h2>\n

Commbank\u2019s Vivek Dhar said today Australia\u2019s largest bank viewed iron ore markets as overly optimistic about Chinese steel consumption in the coming months.<\/p>\n

That\u2019s despite low stocks and weak supply that other analysts say has eradicated what was previously anticipated to be a large second half deficit.<\/p>\n

The trigger for the most recent run this week appeared to be reports that China was drafting a whitelist of 50 property developers who would be eligible for support from financial institutions.<\/p>\n

Dhar noted that hadn\u2019t stopped other whitelisted property firms from defaulting in the past, such as Country Garden.<\/p>\n

\u201cA new \u2018whitelist\u2019 looks to be another temporary measure that may provide a short reprieve for China\u2019s property sector,\u201d he said.<\/p>\n

\u201cHowever, we think it\u2019s a stretch to think that it will be the policy to stabilise China\u2019s property construction activity (35\u201140% of China\u2019s steel demand).<\/p>\n

\u201cWe continue to believe that property developers are still quite some time away from having the confidence to boost new construction activity given current credit conditions.<\/p>\n

\u201cWe believe iron ore prices of $US100\u2011110\/t (62% Fe, CFR China) better reflect the fundamentals in China\u2019s steel market than prices above $US130\/t. We think iron ore markets are overly\u2011optimistic on steel consumption in coming months.\u201d<\/p>\n

Iron ore miners like recent AGM holders Fortescue (ASX:FMG)<\/a> and Mineral Resources (ASX:MIN)<\/a> have grown more bullish on China\u2019s near and long term iron ore demand, despite other producers such as Rio Tinto (ASX:RIO)<\/a> noting its steel output may have already peaked.<\/p>\n

READ MORE:<\/strong> Bulk Buys: Fortescue cops a strike while the iron ore\u2019s hot<\/a><\/p>\n

Many of those miners are also placing hopes on India, which has dramatically ramped up its steel consumption this year, could join with other emerging economies in South East Asia to fill in falling demand from China, which also wants to feed more of its crude steel output from cleaner and greener scrap sources.<\/p>\n

Iron ore futures fell 2.32% today to US$131.55\/t, as China\u2019s National Development and Reform Commission took moves to curb speculation in the market<\/a>.<\/p>\n

#China<\/a>\u2018s #IronOre<\/a> futures drop after Chinese regulators held meeting with iron ore trade firms and futures companies, warned against excessive speculation, market manipulation, etc. https:\/\/t.co\/haGgRmRP6L<\/a> pic.twitter.com\/hSvg2mYov5<\/a><\/p>\n

\u2014 YUAN TALKS (@YuanTalks) November 23, 2023<\/a><\/p>\n\n

That\u2019s code for we don\u2019t like the look of these prices.<\/p>\n

It comes with steel prices still well below 2021 highs that stirred the last major iron ore boom, with high iron ore prices pushing more mills into loss-making territory. At over US$300\/t, met coal prices are also eye-watering for steelmakers.<\/p>\n

Chinese steelmakers still expect strong prices next year, with the chief analyst of Nanjing Iron and Steel telling a conference in China last week he expected iron ore to average US$115\/t in 2024.<\/a><\/p>\n

Fortescue reverted from levels near record highs, down 2.12% today to $24.90, while Rio fell 1.28% and BHP (ASX:BHP)<\/a> was down 1.72%.<\/p>\n

That sunk the materials sector, down 1.56% shortly before the market close.<\/p>\n

\u00a0<\/p>\n

Monstars share prices today:<\/h2>\n\n

<\/span>\u00a0
\n<\/span><\/p>\n

The post Monsters of Rock: As China moves to kill speculation, some folks think the iron bull run can continue<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

\u00a0 Citi upgrades short-term iron ore forecasts on China property rebound hopes But, China\u2019s NDRC cautions against speculation (wink,wink), halting runaway prices Commbank says Chinese [more…]<\/a><\/p>\n","protected":false},"author":0,"featured_media":2140,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2139","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nMonsters of Rock: As China moves to kill speculation, some folks think the iron bull run can continue - Economic Herald<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/economicherald.net\/?p=2139\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Monsters of Rock: As China moves to kill speculation, some folks think the iron bull run can continue - 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