Commodities

As much of the world attempts to come to terms with what, by some metrics, is the largest interruption to global oil supplies in history, much of the emphasis from analysts and geopolitical commentators has been on China.

The ferrous complex is weakening as peace prospects in the Gulf improve.

The ferrous jaws are back.

As the war in the Middle East and throttling of maritime trade through the Strait of Hormuz continue, each passing day brings more news of nations seeking to secure their own domestic energy and food security.

The ferrous complex is trading the war, not itself.

Amidst an environment increasingly defined by crisis-driven reality smacking policymakers in the face, the failure of decades of Australian policymakers to prepare a resilient energy security policy is being laid bare.

China’s January/February growth numbers were out yesterday and showed some broad strength. Industrial production growth increased to 6.3% yoy in January-February from 5.2% yoy in December due to significantly stronger-than-expected exports. Fixed asset investment (FAI) growth significantly increased from -13.0% yoy in December to +1.8% yoy in January-February.

Imagine, for a moment, a very different Australia.

As the world continues to assess the impact and implications of a protracted closure of the Strait of Hormuz amid the ongoing war in the Middle East, Australia is facing major challenges to its fuel security.

In the weeks since news of the war in Iran first hit the airwaves, the Albanese government has been attempting to reassure the Australian public that there is no real concern about fuel supply in Australia.

DXY flamed out last night on the G7 unpledge to release petroleum reserves.

As the war in the Middle East continues to drag on, the Trump Administration is seeking a means by which it can be brought to a swift conclusion.

The world is falling apart, but the jaws are back.

Since the latest round of conflict in the Middle East kicked off on the 28th of February, the cost of a barrel of oil (WTI) has risen by $23.98 compared with the final close of markets prior to the war, representing a rise in oil prices of 35.6%.

The ferrous market does love seasonality, and no sooner has it closed the jaws than it is reopening them.

The ferrous complex rolled on Friday as we head to the Two Sessions.

Roll the tape.

The ferrous complex closed the jaws again yesterday.

There’s not much very encouraging going on for ferrous.

Chinese markets are open again, and dirt is flying.

Iron ore futures have been on a significant sag in Singapore over the Chinese Lunar New Year break.

Société Générale uses options markets to read psychological pivots for precious metals.

China is closed for CNY for a week. SGX is closed for two days. Steel profits have improved, and we will probably see a decent rebound in output post-holiday. However, I expect this will only serve to drive steel prices lower amid stalling (and contracting) steel export growth plus weak domestic demand.