Do spot prices point to an iron winter?

In May we chatted about the monthly change in the RBA’s spot price index from April for bulk commodities (predominantly iron ore and coal).

I noted that the rate of change was back on the up at 5%, but that an iron winter might be coming.

Here’s that old chart, measured in SDR terms to remove exchange effects.

commodity prices.JPG

And, here’s the new chart.

july 2021 bulk commodities perices.JPG

Well, how it played out was that the spot price index gamma (monthly rate of change in the RBA’s bulk commodity index) accelerated in May, performed pretty much the same in June, but dropped significantly in July, just as iron ore equities skyrocketed.

WT?

Short term, if the trend continues there’s probably another month of slowing, but potentially still above o% which would still point to growth.

On the other hand, if it breaks trend to the downside, might it be fair to say that we might be entering an iron winter?

Probably, but the answer has a bit to do with COVID, Brazil and China, and in the latter case the outcome will depend on whether China’s stimulus will gain traction, and whether steel production versus clear skies wins out.

Meanwhile, the charts with long term lines pointing up to the northeast can be found in the decarbonisation minerals/technologies space. Just in case you’re looking!

Add to that Ai, automation/robotics and sprinkle in some pick and shovel circuit board plays once the COVID bottlenecks are over, and you’re probably positioned nicely for what’s to come.

And, a final thought for the weekend. if you’re an industry 3 company still thinking about transitioning to industry 4, you need to take notice of these megatrends now. If you don’t - - - 👇

Mike.

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Michael Ganon#markets, #equities, #stonks, #finance, #economics, #ethereum, #inflation, #deflation, #transient, #nft, #bonds, #gold, #globalmarkets, #globaleconomy, #qe, #qeinfinity, #economy, #interestrates, #business, #trade, #transformation, #strategy, #ceos, #directors, #founders, #cfos, #c-suite, #currencies, #construction, #mining, #renewables, #technology, #leadership, #india, #china, #australia, #perthbusiness, #education, #research, #uk, #gdpgrowth, #retail, #businessowners, #future, #brexit, #nextlevelcorporate, #mikeganon, #community, #tradewar, #America, #covid-19, #bitcoin, # perthbusiness, #populism