Daily iron ore price update (supply deluge)

Find below the iron ore price complex chart for February 21, 2013:

And the chart:

So, a new high for the rebound despite falling swaps, flat Chinese steel prices and another largely weak day in rebar futures:

My spread charts are still WAY out of whack:

And the news overnight from the World Steel Association was that global steel output is up an eminently boring 0.8% in January year on year with weakness focused in Europe:

Brussels, 20 February 2013 – World crude steel production for the 62 countries reporting to the World Steel Association (worldsteel) was 125 million tonnes (Mt) in January 2013, a slight increase of 0.8% compared to January 2012.

China’s crude steel production for January 2013 was 59.3 Mt, up by 4.6% compared to January 2012. Elsewhere in Asia, Japan produced 8.9 Mt of crude steel in January 2013, an increase of 2.7% compared to the same month last year. South Korea’s crude steel production was 5.8 Mt in January 2013, -0.4% lower than January 2012.

In the EU, Germany produced 3.6 Mt of crude steel in January 2013, an increase of 5.4% on January 2012. Italy’s crude steel production was 1.8 Mt, down by -19.7% compared to January 2012. France’s crude steel production was 1.4 Mt, down by -1.3% on January 2012. Spain produced 1.1 Mt of crude steel, -2.5% lower than January 2012.

Turkey’s crude steel production for January 2013 was 2.9 Mt, a decrease of -8.8% compared to January 2012.

In January 2013, Russia produced 5.7 Mt of crude steel, a decrease of -5.7% compared to the same month last year. Ukraine’s crude steel production for January 2013 was 2.7 Mt, -4.4% less than January 2012.

The US produced 7.3 Mt of crude steel in January 2013, down by -5.8% on January 2012.

The crude steel capacity utilisation ratio for the 62 countries in January 2013 declined to 71.2% from 73.2% in December 2012. Compared to January 2012, it is 5.5 percentage points lower.

Iron ore is going to come down at some point, everybody knows it. The following table from Reuters (h/t Ben) gives a good idea of why:

Yes, that is well over one billion tonnes of capacity in Australia alone by 2016 pushing into a steel market that is barely growing. Almost 600 million will be available from the majors alone by the end of this year. Many of the junior projects will never see the light of day.

With the resumption of FMG’s Kings development, it will have all of its expansion online by year end. That is roughly triple what India shipped last year. It is reasonable to argue that in trading range terms we are putting in the year’s highs for iron ore right now.