| The spectacular leap of almost 20% in the price of iron ore on March 7th reveals a lot about the idiosyncrasies of commodities markets. Coming on the first trading day after the opening of China’s National People’s Congress, at which the government pledged to maintain GDP growth of at least 6.5% a year for the next five years, the jump may well have reflected renewed optimism about the appetite of the world’s biggest steel consumer.
But the price of physical commodities tends to depend more on supply, demand and inventories than on the expectations of financial markets. So a giant flower show in Tangshan, China’s biggest steel-producing city, may be an equally good—and more fragrant—explanation for the sudden rally...............................................Full Article: Source
|