Chinese steel prices suffered a massive loss of confidence, falling from 2009 highs by the largest amount since October 2008 due to fears of overcapacity and tightening liquidity.
Hellenic Shipping News: Fundamentals, to be sure, are tenuous: amid the promise of a steadily improving demand outlook driven by China’s nearly $600-billion infrastructure-focused stimulus plan, China’s steel mills pushed production to record 50.68 million tonnes in July. At 600 million tonnes on an annualised basis — a 20 per cent surge from last year’s 500 million tonnes – output appeared out of step with end-user demand which lagged far behind.
This could be red flag for Chinese growth, and bad news for iron ore, given China is the #1 source of demand. The Balic Dry Index related to shipping ore is down 3%.
Steel, like other industrial metals, has over the past month become an increasingly popular speculative play, with China’s easy credit policy driving funds toward any liquid markets with a bright outlook.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.