Iron ore’s rally is starting to look overcooked – by Clyde Russell (Reuters U.S. – August 9, 2016)

Aug 9 At what point is the 43 percent rally in iron ore prices this year overcooked, given it remains a well-supplied market facing mounting economic uncertainty across the globe.

The answer lies clearly in the volume of Chinese imports of the steel-making ingredient, which have been robust so far this year and defied expectations that growth would be moderate at best.

China, which buys about two-thirds of global seaborne iron ore, imported 88.4 million tonnes in July, the second-highest amount on record, according to customs data. In the first seven months of the year China has imported 582 million tonnes of iron ore, up 8.1 percent on the same period in 2015 and putting it on track for full-year imports near 1 billion tonnes, which would be an all-time high.

It’s likely that imports will continue to be robust this month, with Thomson Reuters Commodity Research and Forecasts showing that already 67.5 million tonnes will arrive at Chinese ports by Aug. 31.

This likely includes all the cargoes that will come from Brazil and number three supplier South Africa, as any vessels setting sail now would arrive in September, but it won’t capture all the shipments from top exporter Australia given the shorter voyage durations.

As long as Chinese iron ore imports remain strong and show year-on-year growth, it’s hard to make a convincing case as to why prices should decline.

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