Chinese Iron Ore Imports Rise 70% As Steel Production Stagnates

The last time we saw this sort of stockpiling behavior the yuan was under 7-to-the-dollar and our guess was that the order had gone out to importers to convert currency into storable commodities ahead of a devaluation in the yuan.

Here's the introduction to a September 2023 post:
"When will China invade Taiwan? The answer lies in West Africa"

China has been stockpiling storable commodities for the last year. At first I thought it was just frontrunning a depreciating yuan by turning assets/reserves into something more tangible.

But in this piece we see there may be a more ominous explanation: stockpiling ahead of war....

The key period on the chart below is from the little ledge formed by the price line in June-July 2022 to the present.

TradingView

The currency did weaken but whether our guess was right is an open question, the Politburo doesn't invite us to sit in on their meetings.

And from Hellenic Shipping News:

March 7: "February’s Brazilian iron ore shipments to China via Capesize vessels surged by 70% compared to the corresponding period last year"

March 7: "Dalian iron ore slides as weak steel market weighs"

So who knows? But if I was long the German export industry I would be concerned that further weakening in the yuan would make Chinese exporters even more competitive than they already are.

Except maybe for Rheinmetall. The armaments industry seems pretty well insulated from currency fluctuations. RHM.de 437.40 +1.18%