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Steel: severe inventory issues continue - Westpac

FXStreet (Guatemala) - Robert Rennie, analyst at Westpac Banking Corporation explained current conditions surrounding the all important Steel market, a market that is key to AUD/USD.

Key Quotes:

"The World Steel Association released its monthly update for August earlier this week, confirming that global steel markets are continuing to work through severe inventory issues. Global steel production was 132Mt in August, down 2.4% versus a year ago.

China saw steel production down 2.8% versus a year ago and Japan saw a close to 6% drop. The rate of contraction in steel production is now arguably faster than most pessimistic forecasts, suggesting that demand for iron ore will remain weak.

Now, the relationship between global steel production and the iron ore price need not be that firm due to seasonal factors and inventory etc. However, in the face of increased supply in the months ahead, we would continue to argue for further weakness in iron ore prices in the weeks ahead.

AUD/USD back above the key 0.70 level

AUD/USD is currently trading at 0.7023 with a high of 0.7027 and a low of 0.6938.
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