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The Only 'Un-Manipulated' Chart Of The Real Un-Recovery You'll Ever Need

Tyler Durden's picture


Probably no other commodity is tied to global growth, especially EM and China growth, than the key steel-making ingredient - Iron Ore. The iron ore price continues to plunge and it would appear that very few are focused on it. Critically, this is the one commodity that is not a futures contract, cannot be manipulated by trading desks or by levered hedge funds. Despite all the euphoria about risk assets and commodities - and the central bank front-running - Iron Ore prices continue to sink lower and lower...



(h/t wallstreetmane)


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Fri, 08/17/2012 - 09:24 | 2713806 AUD
AUD's picture

Gina Reinhart might have to go on a diet.

Fri, 08/17/2012 - 10:06 | 2713953 HarryM
HarryM's picture

Interesting - according to Doug Short there is almost no chance of us entering a recession.

Fri, 08/17/2012 - 10:26 | 2714031 Precious
Precious's picture


Fri, 08/17/2012 - 10:35 | 2714058 nolla
nolla's picture

Triple bottoms are, oh, so rare.

Fri, 08/17/2012 - 10:46 | 2714104 Urban Roman
Urban Roman's picture

So, Gina Reinhart really needs that diet. How many chins does she have?

Fri, 08/17/2012 - 13:30 | 2714681 Traprock
Traprock's picture

More than a chinese phone book.

Fri, 08/17/2012 - 17:14 | 2715401 Dead Canary
Dead Canary's picture

HA! That's one's so old the first time I heard it I fell off my dinosaur and cracked my stone underwear.

Thu, 08/23/2012 - 22:58 | 2732570 I think I need ...
I think I need to buy a gun's picture

is that a triple bottom or a completed right shoulder now going thru the 2 previous lows finishing off the head and shoulders pattern

Fri, 08/17/2012 - 11:06 | 2714155 old naughty
old naughty's picture

no chance of us entering a recession?

I say proven beyond reasonable doubt the world has.

Fri, 08/17/2012 - 11:37 | 2714228 NotApplicable
NotApplicable's picture

I think the takeaway here is that we've blown past it, never to return.

Fri, 08/17/2012 - 10:10 | 2713964 Peter Pan
Peter Pan's picture

Actually the whole of Australia will be going on a diet at this rate. As for the Brazilians they will also feel the pinch having commissioned the construction of about 18 supertankers for the transport of ore.

The two product/two customer economy of Australia may well be hitting a speed hump of epic proportions.

Fri, 08/17/2012 - 10:41 | 2714080 TwoShortPlanks
TwoShortPlanks's picture

Two-speed economy engages reverse's hard to slow down all those Audi's ya know!

Fri, 08/17/2012 - 10:54 | 2714119 markelshark
markelshark's picture

Historically the price is still pretty freaking low

Fri, 08/17/2012 - 11:54 | 2714265 ZeroSpread
ZeroSpread's picture

Nice and very straight forward H&S plot..

Fri, 08/17/2012 - 15:21 | 2715006 macholatte
macholatte's picture


Isn't that like the "Matterhorn" formation?

Fri, 08/17/2012 - 10:43 | 2714093 Desert Irish
Desert Irish's picture

Australian housing crash in 10....9.....8.....

On top of that the Julia might want to revise the estimated $10 billion her government was meant to get from the new mining tax and the estimated $450 billion in capital expenditure this year on mining related works. I agree with the poster above Australia could be heading for a major hit.


Fri, 08/17/2012 - 11:18 | 2714180 Praetor
Praetor's picture

Didn't Swan predict he will reduce Australia's debt due to high iron ore prices? Me thinks he will be wrong!

Thu, 08/30/2012 - 04:57 | 2748919 Ar-Pharazôn
Ar-Pharazôn's picture


Fri, 08/17/2012 - 09:25 | 2713808 buzzsaw99
buzzsaw99's picture

I LOLed at those who paid $100 for CLF.

Fri, 08/17/2012 - 09:27 | 2713809 firstdivision
firstdivision's picture

Ummm that's becuase Economy of Scale took over....yearh....that's it.  Does that allow me to walk into the nearest university and claim my Econ PhD?  Also, do I get to be on CNB(S)C as an "economic expert"?

Fri, 08/17/2012 - 09:25 | 2713810 Dr. Engali
Dr. Engali's picture

China must have run out of empty cities to build. Time to tear some down and start over.

Fri, 08/17/2012 - 09:36 | 2713855 diogeneslaertius
diogeneslaertius's picture

John Maynard Keynes texted me to say he approved of your plan to revitalize the ponzi scheme 

Fri, 08/17/2012 - 11:34 | 2714226 Overfed
Overfed's picture

He would have called, but his mouth was full of cock.

Fri, 08/24/2012 - 00:25 | 2732690 MedTechEntrepreneur
MedTechEntrepreneur's picture

Post of the night WINNER!

Fri, 08/17/2012 - 09:47 | 2713900 CClarity
CClarity's picture

That's just how they stockpile commodities there - in empty cities and buildings.  It's just a different method of market manipulation.

Thu, 08/30/2012 - 04:58 | 2748921 Ar-Pharazôn
Ar-Pharazôn's picture

that's for a sure a solution :P

Fri, 08/17/2012 - 09:27 | 2713818 Bahamas
Bahamas's picture

All those Iron Man movies didn't work the price up.

Fri, 08/17/2012 - 09:49 | 2713904 Miss Expectations
Miss Expectations's picture
Robert Downey Jr. injured, 'Iron Man 3' stops shooting

Fri, 08/17/2012 - 10:10 | 2713969 Doubleguns
Doubleguns's picture

We that expains the drop in price then.

Fri, 08/17/2012 - 12:25 | 2714389 mick_richfield
mick_richfield's picture

Stand in: Tin Man. 

Located in warehouse of sets for old movie, found nearby on lot.

He's a little rusty, but works cheap.


Fri, 08/17/2012 - 09:29 | 2713825 eigenvalue
eigenvalue's picture

And the steel futures on Shanghai Futures Exchange hit a 2 year low today. 

Fri, 08/17/2012 - 09:30 | 2713834 Sofa King
Sofa King's picture

They probably found more garbage to blend with it to make their steel even shittier than it already is, so they don't need to buy as much.

Fri, 08/17/2012 - 09:32 | 2713840 Debtonation
Debtonation's picture

If it's not a future then how am I supposed to short it?

Fri, 08/17/2012 - 09:32 | 2713841 crito
crito's picture

thanks for the red arrow on the graph, I couldnt figure out which direction its was heading.

Fri, 08/17/2012 - 11:21 | 2714191 Praetor
Praetor's picture

Nah thats just the shlong of Australia's mining magnates once they realised their profits will be slashed.

Fri, 08/17/2012 - 14:06 | 2714769 Catch-22
Catch-22's picture

...major head and shoulders Bitchez; one more notch aaaaaaaannnnd it's gone...

Fri, 08/17/2012 - 09:34 | 2713846 rsnoble
rsnoble's picture

That's good for me as I have a small machine shop and fabricate a lot of stuff. So all these lies actually hurt, sky high metal prices in 2011 and yet the economy sucks. What shortage? Down south they are filling out of business warehouses with steel because they have no place else to put the shit.


Fri, 08/17/2012 - 09:34 | 2713847 SilverTree
SilverTree's picture

How low can it go?

Fri, 08/17/2012 - 09:38 | 2713867 Sofa King
Sofa King's picture

I believe the answer is zero, theoretically speaking, of course.

Fri, 08/17/2012 - 09:42 | 2713884 LongSoupLine
LongSoupLine's picture

unless there's a bond for it...then it can go negative.

Fri, 08/17/2012 - 13:30 | 2714683 poor fella
poor fella's picture

I'm curious how high it can go... Let's put it in the futures markets.

GS and JPM could rehire their fiction authors to write stories about how iron is as important as water.

Fri, 08/17/2012 - 09:35 | 2713849 Meesohaawnee
Meesohaawnee's picture

speaking of manipulated. two minutes into the trading. you see the methodical pop pop pop. to all indexes.. yup. its algo day! have a nice weekend yall. good luck. like lt kilgore said in apocalypse.. someday this wars gonna end. Someday this fraud is gonna end.

Fri, 08/17/2012 - 09:35 | 2713850 diogeneslaertius
diogeneslaertius's picture

south-central africa has some of the richest untapped Fe

Fri, 08/17/2012 - 09:45 | 2713890 buzzsaw99
buzzsaw99's picture

The Earth's crust is 90% iron.

Fri, 08/17/2012 - 11:08 | 2714162 Stuck on Zero
Stuck on Zero's picture

The earth's core is 90% iron.  The earth's crust is mostly silica, oxygen, and aluminum.  Only 5% iron.


Fri, 08/17/2012 - 12:43 | 2714485 mick_richfield
mick_richfield's picture

Earth mass == 6e21 tons

earth is 32% Iron

total iron mass in Earth == 2e21 tons

current price per ton == $110

total value of Iron in Earth == 2e23 dollars

people on earth == 7e9

total value of iron in Earth, per human: $ 3e13

$30 Trn per person!

We are all rich beyond our wildest dreams!

Fri, 08/17/2012 - 13:32 | 2714692 poor fella
poor fella's picture

So do I buy puts or calls?!! TELL ME!

Fri, 08/17/2012 - 14:27 | 2714834 epwpixieq-1
epwpixieq-1's picture

Absolutely agree!

In addition the Earth is flowing in a Sea of Energy (Tesla, Thomas Morrey).

The problem with that though, is that, if one thing is widely abundant and easily accessible it is NOT of a value any more. This is why the CONTROL over the resources is more VALUABLE than the resources themselves.


Thu, 08/30/2012 - 05:03 | 2748923 Ar-Pharazôn
Ar-Pharazôn's picture

"earth is 32% Iron"


true, but mostly in the core

Fri, 08/17/2012 - 09:36 | 2713854 Phroneo
Phroneo's picture

This should be ringing some serious alarm bells. Especially considering the recent stories about  record (and rising) stockpiles. What if China started buying only what it actually uses? The price would plummet. Yet of course the markets are marching towards post GFC highs! 

Fri, 08/17/2012 - 09:36 | 2713858 schatzi
schatzi's picture

Interesting. Learn't something new today and good to see a price not leveraged by the finance sector.


Is it possible that the iron ore price is not only dependent on sagging demand, but also production over-capacity? Like the Baltic Dry Index represents both overcapacity and reduced demand, so therefore weakens the correlation between global trade and the Baltic Dry Index.

Fri, 08/17/2012 - 14:17 | 2714805 SamuelMaverick
SamuelMaverick's picture

Another metric price that is not completely manipulated by TPTB are the scrap prices for all metals at your local scrap yard.  They have been tanking so far this year.

Fri, 08/17/2012 - 09:37 | 2713861 Haager
Haager's picture

Less and less iron is needed - they prefer depleted uranium, aluminum, kevlar, nanoparticles...

Fri, 08/17/2012 - 09:48 | 2713901 LongSoupLine
LongSoupLine's picture

likely "they" prefer lead and brass for the increased demand for "training" rounds

Fri, 08/17/2012 - 09:37 | 2713862 youngman
youngman's picture

That is bad for Austrailia and Brazil..........oh oh...but maybe we can do the steel stud thing again in the USA.....homebuilding with steel....they tried that in the 80´s...didn´t catch on...

Fri, 08/17/2012 - 09:40 | 2713873 Sofa King
Sofa King's picture

How do you think they build low income housing in the ghetto?

Fri, 08/17/2012 - 09:48 | 2713905 adr
adr's picture

Low income houing in the Ghetto looks better than my middle class neighborhood. All built by publicly traded builders like Lennar.

The government wouldn't be using taxpayer dollars to buy votes and prop up select homebuilders. No, the government wouldn't do that.

Fri, 08/17/2012 - 09:50 | 2713909 LongSoupLine
LongSoupLine's picture

no longer the plan with thousands of toxic FEMA trailer inventory to give away.

Fri, 08/17/2012 - 17:35 | 2715464 Meatier Shower
Meatier Shower's picture

Corrugated iron sheets?

Fri, 08/17/2012 - 09:37 | 2713866 hedgeisforpussies
hedgeisforpussies's picture

yes iron ore is not reacting to draghi and bb puts. true state of supply/demand. 

Fri, 08/17/2012 - 09:54 | 2713921 Winston of Oceania
Winston of Oceania's picture

Aren't they the makers of the "mostly electric" car known as the milivolt?

Fri, 08/17/2012 - 12:35 | 2714436 mick_richfield
mick_richfield's picture

That looks like quite a ride.

I saw a really good commercial for it, set to that old Doors tune.

Come on baby, light my fire.

Try to set the night on fire.

Try now we can only lose,

And our love become a funeral pyre.

Fri, 08/17/2012 - 09:40 | 2713875 Roland99
Roland99's picture

oh the irony


Fri, 08/17/2012 - 09:46 | 2713893 Dr. Engali
Dr. Engali's picture

Bu dump bump.

Fri, 08/17/2012 - 12:36 | 2714442 mick_richfield
mick_richfield's picture

Be nice.  He's only trying to show his mettle.

Fri, 08/17/2012 - 09:41 | 2713878 youngman
youngman's picture

But I will also add....."food" will take over here....the grains.....I think we are in for an interesting few years on that...first the drought this year....less supply...panic buying...then maybe another drought next year....droughts seem to be a 5-10 year cycle

Fri, 08/17/2012 - 09:41 | 2713879 LongSoupLine
LongSoupLine's picture



It's because GM now makes their entire vehicle line from plastic, paper pulp and shredded middle class taxpayer bone fragments.

Fri, 08/17/2012 - 09:45 | 2713891 adr
adr's picture

It doesn't matter. Nothing else actually nedes to be built. Inventory was so overproduced for the past few years, it can be channel stuffed for a very long time. By the time the products make it through all the foreign divisions, the company can claim they are back in style.

The overproduced inventory is tranferred between international divisions and booked as sold each time. Even in a declining sales environment retailers can still show comp gains. It is all fake, but Wall Street doesn't care. Cheating at cards guarantees a win, until you get caught.

I've never see anything like it. You can go into a store one night and see shelves of a product. You go in the next day and all of the product is gone. The company will claim it was all sold. When? While the store was closed?

Ponzi schemes always look like good investments, even right before the end.

Thu, 08/30/2012 - 05:08 | 2748927 Ar-Pharazôn
Ar-Pharazôn's picture



they got caught several and several times with the hand in the jar.............


i still see the same politcal class in the same position.


nothing really change, too many blind people still looking TV shows, sports, etc etc.



Fri, 08/17/2012 - 09:50 | 2713908 FieldingMellish
FieldingMellish's picture

Iron ore had a tremendous run since 2008, and I mean tremendous. It rose from $14/ton to $187 from 2003 to 2011 and now back to the $120s. Prices were fairly stable until the first QE.

Fri, 08/17/2012 - 09:51 | 2713912 kridkrid
kridkrid's picture - play around with the one month and one year chart here as well.  BDI is also tough to manipulate... and falling fast.



Fri, 08/17/2012 - 09:53 | 2713920 101 years and c...
101 years and counting's picture

anyone check BDI lately?  714 and falling fast.

Fri, 08/17/2012 - 10:07 | 2713954 orangegeek
orangegeek's picture

On Feb 6 2012, Baltic Dry Index was 648 - about half way into the algo-bull market that ended in April. 


Let's see what comes of this.




Fri, 08/17/2012 - 10:14 | 2713986 101 years and c...
101 years and counting's picture

during a period where the US GDP grew 1% and europe contracted.  well, US now in recession and the contraction in europe is getting worse.  all this printing nonsense is a diversion to keep investors from staring at the collapsing economies, revenues, earnings, etc.  by the time they wake up, the smartest people are all out (or short) and then they send in the black swan to reap the benefits.


Thu, 08/30/2012 - 05:10 | 2748928 Ar-Pharazôn
Ar-Pharazôn's picture

you steal my words :P


anyway you couldnt say that better.... totally agree with your vision

Fri, 08/17/2012 - 10:20 | 2714003 kridkrid
kridkrid's picture

your post was so two minutes ago :-).

When I saw the headline, I immediately looked up the BDI.  There aren't many un-manipulated data points... but there are a few.

Here's another one... you know that whole $6 trillion in new debt since Obama took over?  Well, it may surprise many to learn that relative to other presidents, spending under Obama hasn't really exploded... rather it's been mostly flat.  The number that can't be manipulated (or is hard to manipulate, anyways)... revenue.  At the end of the day, the gov't takes in what it takes in... and revenues are COLLAPSING (at all levels of gov't, really).  Of course, this would seem like the natural response that someone from the Obama administration would point towards when the other side wants to paint him as a big spending socialist... so what gives? 

It's all a scam, clearly.  Nobody will talk about reality.  Reality sucks.

Thu, 08/30/2012 - 05:13 | 2748929 Ar-Pharazôn
Ar-Pharazôn's picture

you're right BUT:


he didnt cut expenses. yeh perhaps 2%?


it's kinda a marxist behaviour as no administration have to bother working hard to keep their work.

Fri, 08/17/2012 - 10:00 | 2713938 DOT
DOT's picture

Fourth most common element in Earth's crust.

Fri, 08/17/2012 - 12:25 | 2714393 Roland99
Roland99's picture

I like uncrustables

Fri, 08/17/2012 - 10:02 | 2713943 orangegeek
orangegeek's picture

More deflation anyone?

Fri, 08/17/2012 - 10:35 | 2713944 TwoShortPlanks
TwoShortPlanks's picture

The Western Australian state flag has a dirty great big Black Swan on it. Ground Zero. Ain't irony a bitch...bitchez?!

And to make matters worse, that US lap-dog, Johnie How-hard can I blow Bush, sold off 2/3rds of our fucking Gold reserves.

Fri, 08/17/2012 - 10:02 | 2713945 hardcleareye
hardcleareye's picture

A more telling chart is to look at the commodity price of iron ore from 2002 to present....  the author is not looking at the "big picture".... <snark>

Fri, 08/17/2012 - 10:56 | 2714125 haskelslocal
haskelslocal's picture

Good point. Perhaps whomever was hoarding iron ore since 2009 is now not using it to build steel and therefore, flooding the market? China.

Fri, 08/17/2012 - 10:04 | 2713950 Red Shield
Red Shield's picture

Iron is truly a Barbarous Relic given the advancments in materials sciences and nanotechnology. Iron is expensive to dig, process and transport. The age of Iron ended long ago.

Fri, 08/17/2012 - 15:55 | 2715111 MisterMousePotato
MisterMousePotato's picture

Worst of all, you can't eat it.

Thu, 08/30/2012 - 05:15 | 2748930 Ar-Pharazôn
Ar-Pharazôn's picture

tell me, what do you use to build skyscraper?



Fri, 08/17/2012 - 10:10 | 2713970 lamont cranston
lamont cranston's picture

In August 2011 we were getting $16.30 CWT for steel/iron scrap salvaged from demo sites. Today it's $10.00. 

Fri, 08/17/2012 - 10:41 | 2714082 MachuPicchu
MachuPicchu's picture

New QE then is coming...

Fri, 08/17/2012 - 10:47 | 2714106 Ex_Nihilo
Ex_Nihilo's picture

how about the Dry Baltic Index?

Guys check this out - Mayor of Madrid publicly admits a Bailout of Spain seems inevitable


Fri, 08/17/2012 - 11:25 | 2714204 DUNTHAT
DUNTHAT's picture

Worked in Steel 25 years.


NEVER, EVER, ignore steel scrap and iron ore prices...

Always leads...

Fri, 08/17/2012 - 11:53 | 2714261 Carl Spackler
Carl Spackler's picture

Another chart showing that when financial asset reckoning day comes, it will be ugly for the muppets.




Fri, 08/17/2012 - 11:54 | 2714264 Inthemix96
Inthemix96's picture

Well this looks like my new product Bolloksium is just right for this market intervention.

Two parts shit, one part derivative, three parts re-hypothicated iron ore bollocks.  Result?

First class product.

Fri, 08/17/2012 - 12:24 | 2714390 runforthehills
runforthehills's picture

iron ore cannot be manipulated by trading desks?? LOL !

why then are Glencore, JPM, etc. so eagerly playing in this market??

Fri, 08/17/2012 - 13:33 | 2714698 Shelby Moore III
Shelby Moore III's picture

This is another evidence that China has already hard landed at low single digit or negative real GDP contraction. Click here for other recent evidence.

Fri, 08/17/2012 - 13:47 | 2714730 JohnFrodo
JohnFrodo's picture

BHP cant give away steelmaking coal

Fri, 08/17/2012 - 15:17 | 2714992 billsykes
billsykes's picture


"...Iron ore is one of the biggest dry bulk commodities traded and shipped. Total estimated iron ore production in 2010 was 1.7bn tonnes; seaborne trade was estimated at 1bn tonnes and worth approximately $150bn.

The growth of spot trading... "

"The majority of traded iron ore — up to 80% — has traditionally been sold using an annual benchmark price negotiation. Spot trading so far has been predominantly in iron ore fines driven by producers dealing with trading houses and mills.

But huge swings in the delivered price and the emergence of a larger spot market for iron ore have underlined the need for a dedicated, cleared contract to manage price risk"

Just like Freight with FFA's


The 2 clearing houses;

LCH.Clearnet and SGX AsiaClear.

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