Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets

"It may not be one of the core three ...econometric indicators of China's economy ..., but when it comes to getting a sense of capacity bottlenecks in China's fixed investment pipeline ... nothing is quite as handy as commodity, and particularly iron ore .. stockpiles at China's major ports."






I think most importantly, the article does indicate that the stockpiles are being used for loan collateral.

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets | Zero Hedge

Chinese businesses have also used copper as collateral for financing. It's a way to get around government attempts to control credit expansion.

Then last year, the Chinese monetary authority implemented new rules that made it more difficult to use copper as collateral. Those went into effect around midyear 2013, right about where you see the iron ore inventory start shooting up in the chart above.

Is that chart saying they have over a billion ton surplus? If it's reading in millions of tons that's what it looks like.

Here's another tidbit to go with the equation. They've built a number of entire cities on speculation, and many of them are sitting there empty. Just yesterday I heard talk of a Chinese "housing bubble", the same thing that crashed us in 2008.
Since they're basically our "banker", what would happen if their economy collapses like ours did?

So what does this mean for us in the U.S. in terms of scrap?? Price Drops? Price Rises?

Rumors are that the proposed Keystone Pipeline from Canada will be built with used pipe from India. Figures.

Originally Posted by erewen

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets

"It may not be one of the core three ...econometric indicators of China's economy ..., but when it comes to getting a sense of capacity bottlenecks in China's fixed investment pipeline ... nothing is quite as handy as commodity, and particularly iron ore .. stockpiles at China's major ports."






I think most importantly, the article does indicate that the stockpiles are being used for loan collateral.

Chinese Iron Ore Stockpiles Rise To Record As End Demand Plummets | Zero Hedge

Actually none of that adds up. The quote says " port stockpiles", their chart says "port inventory", but if you look at the inset in the chart it says "price", and the number there matches the top of the scale

Originally Posted by Bear

Actually none of that adds up. The quote says " port stockpiles", their chart says "port inventory", but if you look at the inset in the chart it says "price", and the number there matches the top of the scale

That "price" inset is confusing. The value being graphed isn't price; it's total iron ore inventory at China's ports:
"Inventories at ports were 100.25 million metric tons last week, exceeding 100 million tons for the first time since July 2012, according to data from Shanghai Steelhome Information Technology Co. Reserves increased 16 percent in 2014. ... The increase in inventory levels creates near-term downside risk to iron ore prices."
China Ore Stockpiles Rise to Record on Financing Deals - Bloomberg

The spot price for iron ore has been weak lately, and producers have been forecasting further softening in the months ahead. I don't know what that means for ferrous scrap prices.