"Iron ore doesn't have good fundamentals," warns one analyst as while the crackdown on leverage in Chinese capital markets (which has tightened liquidity everywhere) is the immediate catalyst, "supply-side pressure is huge as ever, and mills are still seeking to draw down inventories."
Some market observations courtesy of the latest "Morning Porridge" from Mint's Bill Blain
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Blain’s Morning Porridge – May 9th 2017
“I’ve met the Emperor of China and the only British working miner, but I’ve never…..”
With "risk" in most of the developed world seemingly a long forgotten four-letter word, as seen by today's plunge in the VIX to a level not seen in 34 years, traders hoping for some "risk event" have been confined to the recent turmoil in China, where overnight not only did trade data disappoint, with both imports and exports missing, but bond yields jumped to the highest level since 2015, dragging stocks lower even as the local commodity crash slammed iron ore and copper to new YTD lows.
The forced deleveraging of China's WMP-driven excess was not helped overnight by disappointing trade data as both import and export growth slumped.
April Imports grew at just 11.9% YoY (in USD terms), dramatically less than the 18.0% expectations and well down from March's 20.3% growth.
April Exports grew at 8.0% YoY (in USD terms), less than half the growth of March (16.4% YoY) and well below the 11.3% expectations.
Gold Coins and Bars Demand Rises 9% In Q1, 2017