The Path 05/09/2016

Iron Ore in Free Fall (BBG)

Iron ore’s in free fall. Futures in Asia plummeted after port stockpiles in China expanded to the highest in more than a year following moves by local authorities to quell speculation in raw-material futures. The SGX AsiaClear contract for June settlement tumbled 9.1% to $50.50 a metric ton at 1:24 p.m. in Singapore, while futures in Dalian sank 7.1%, retreating alongside contracts for steel and coking coal. The benchmark Metal Bulletin price for 62% content spot ore in Qingdao plunged 12% last week for the worst loss since 2011. Iron ore is falling back to Earth after an unprecedented wave of speculation in China, triggered by signs the economy was stabilizing, helped to hoist benchmark prices to the highest in 15 months.

The jump prompted regulatory authorities and exchanges to team up to quell the excesses, while banks including Brazil’s Itau Unibanco warned the price gains weren’t justified in an oversupplied market. Data on Friday showed port holdings have expanded to almost 100 million tons. [..] Inventories held at ports across China increased 1.4% to 99.85 million tons last week to the highest since March 2015, according to data from Shanghai Steelhome Information. The holdings have expanded 7.3% this year after rising for five of the past six weeks.

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