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Steel, Iron Ore, Coking Coal Bubbles Keep Expanding

November 1, 2016 at 19:18 by Brent Lantzy

Iron ore stockpiles at Chinese ports climbed 0.9% to 106.75 million metric tons, the highest since November 2014, according to data from Shanghai Steelhome Information Technology Company. Holdings are up 15% in 2016, rising 2.1% in October, and continuing 5 consecutive quarters of gains.

The highest volume January 2017 iron ore contract on the Dalian Commodity Exchange (DCE) closed up 8.5 yuan on Monday at 494.5 yuan per ton, touching a yearly high of 502.5 yuan per ton during that session.

According to Metal Bulletin, the spot price for 62% fines deliverable to the Qingdao port rose to $64.38 per ton on Monday, its highest level since April 29. The Steel Index reports 62% fines deliverable to the Tianjin port rose to $63.80 per ton on Monday, also a new six month high.

recent report by the WSJ warns of asset bubbles forming in China as huge amounts of speculative money move between stocks, bonds, and commodities – specifically, iron ore.

A shortage of coking coal is helping to drive iron ore and steel prices higher. In an interview with Bloomberg, Dang Man, an analyst with Maike Futures Co. noted:

The shortage in coal supply right now seems unlikely to improve before year-end. That’s driving steel prices and production higher, benefiting iron ore too.

The highest volume January 2017 coking coal contract on the DCE was up 26.5 yuan on Monday, closing at 1,289.5 yuan per metric ton, while touching a high of 1,322.5 yuan – not far from the yearly high of 1,322.0 yuan set on October 26.

SHFE steel rebar futures for January 2017 delivery were up 31 yuan at 2,613 yuan per ton as of 18:48 GMT on Tuesday.

China’s Manufacturing Purchasing Managers Index rose from 50.4 in September to 51.2 in October, according to Chinese government data.

If you have any questions and comments on the commodities today, use the form below to reply.

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