Iron Ore swaps came under pressure following both the onshore futures markets down. Rebar saw a sharp sell off coming into the London open – not on new news just speculative trading.
Sentiment remains weak and from the outside looking in, we still have further to go on the downside with definitely more scope to move down rather than up. The fundamentals of the market are still very weak, as are steel prices (Steel prices in Tangshan for long products drifted down today) as are mill margins.
But these levels are starting to look cheap – and are in fact all-time lows – hence the confusion, especially with physical being not as weak as the paper (TSI actually printed +0.50 cents to $58.50 Tuesday).
As a result, some may find it tempting to see some pick up here and if we see another relief rebound, sell back into it.
With the USD presently so strong, which in turn is aiding instability in China, (a major victim of that carry trade) perhaps it’s still not the right time to buy back. Having said that, those who have bought these dips and sold into the rallies in the past have come out on top.
10 March 2015 Dalianiron oreiron ore derivativesiron ore swapssteel futuresTangshan Billet