This summer we saw massive builds of iron ore (
see post) and steel inventories in China. That drove domestic prices to new multi-year lows (
see post). With China's economy beginning to stabilize (
see post), these inventories are now declining.
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| Source: DB |
 |
| Source: DB |
According to Deutsche Bank, the restocking of these inventories should increase production and result in moderate price increases for iron ore. This is by no means a start of a new commodity boom - the market remains well supplied.
DB: - We expect that steel production
rates in China could rebound into the end of the first
quarter and potentially approach the 2.1mt/day level
during the year. We expect that this in addition to a
modest restocking event should help to push iron ore
prices higher into mid-year.
SoberLook.com
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