LAUNCESTON, Australia, Aug 22 (Reuters) – Iron ore’s bubble has burst in the last month with prices down by a third, but just as the market got ahead of itself during the rally it may also be overcooking the decline.
Benchmark 62% iron ore for delivery to China MT-IO-QIN62=ARG, as assessed by commodity price reporting agency Argus, ended at $83.75 a tonne on Wednesday, down 33% from its peak so far this year of $125.20 on July 3.
It’s also worth noting that the steel-making ingredient is now only just above the $75.50 a tonne close on Jan. 24, the day before a tailings dam disaster at a mine operated by Brazil’s Vale killed more than 200 people and upended the supply-demand balance.
The decline in prices would normally suggest that the supply disruption from the mines closed in Brazil in the wake of the dam burst is now a thing of the past, or alternatively, that demand from top buyer China is slowing.
The problem is that the vessel-tracking and shipping data indicate that Brazil’s exports are still not back to what could be viewed as normal levels.
For the rest of this column: https://www.reuters.com/article/column-russell-ironore/column-iron-ores-balloon-is-popped-but-prices-may-have-deflated-too-much-russell-idUSL4N25I1PX