Iron ore rally turning into dead cat bounce
After weeks of relentless selling benchmark iron ore prices soared on Monday.
Northern China 62% Fe imports tracked by The SteelIndex jumped $3.20 or 3.9% to trade at $85.20 a tonne, lifting the steelmaking raw material off a string of five-year lows set this month.
It was the strongest one-day gain since March when iron ore was recovering from the worst one-day decline since the financial crisis, an eye-watering 8.3% drop in a single session.
That was yesterday.
On Tuesday the price of iron ore was sliding again, falling nearly 1% to $84.50 as continuing worries about the Chinese economy and the flood of new supply dampen enthusiasm for the commodity.
During previous slumps iron ore quickly clawed its way back.
In 2011 between October 7 and the end of that month the price went from $170 to $117, but by mid-November the price was back within shouting distance of $150.
The pattern was repeated in September a year later with a nearly $50 plunge in the space of six weeks to below $90 a tonne for the first time since 2009. Then over just eight sessions it recovered by more than 20%.
In the past recoveries have been so swift that until now iron ore had never averaged below $100 during any quarter since 2009.
This time it's beginning to look different.
The price of iron ore remains 37% weaker than at the start of the year, and nowhere near its 2014 high of $158.90 struck in February.