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moorookamick

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21/06/14

00:53

Post #: 13554005
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Originally posted by Rondog ↑

Oversupply is discussed here:
http://www.macrobusiness.com.au/2014/06/iron-ore-chockers-at-chinese-ports/

Quote:
Stockyards in Chinese terminals have provided a useful buffer to absorb excess seaborne iron during the early stages of structural oversupply; inventories have increased by 39Mt since October 2013. With iron ore port stocks at record levels, could stockpiles be near saturation? Based on a sample of 15 large bulk terminals, our analysis suggests that Chinese port stocks are currently using 89% of available storage capacity. On that basis, Chinese port stocks could be c.14Mt away from hitting a physical constraint on storage space. This would imply that further port restocking can only absorb a limited amount of additional ore, and Chinese ports will no longer act as a safety valve in an oversupplied market. In other words, the ability to cushion the impact of structural oversupply via inventory build-up is now quite limited, so marginal producers are now fully exposed to the structural oversupply in the market. Our 2015 price forecast remains unchanged at US$80/t.
Unquote.

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Perhaps the Chinese reported inventories of IO is similar to reported Aluminium inventories which
have been financed multiple times and, among other things, gave the impression of higher
inventories than was actually there.
MM
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