Chart of the day: Iron ore. Commodities such as Copper, Steel, Coking Coal, Iron Ore can be good bellwether proxies for Chinese economic strength (or weakness). Currently Copper after a late 2016 spurt has gone flat and Steel Rebar and coking coal prices have been down. Iron Ore is no exception recently moving into ‘official’ bear status. With rising inventories in China and speculators unwinding longs, and Australia’s Dept. of Industry Innovation & Science predicting lower prices, this has only added more impetus to the decline.
Nymex Iron Ore prices are nearing strong Fibonacci resistance at approx 74 level, which looks to be a possible important breathing place for prices as they decide where to go next. A bounce from here could see prices return to the 80 level, but a strong break from 74 would target 63 then 57.
So can we conclude from this that Chinese economic sentiment is not looking too rosy currently (or at least stagnant) or simply just another red herring?