COLUMN-Iron ore's false bull rally to plummet back to reality: Russell

miércoles 10 de febrero de 2016 23:27 GYT

(The opinions expressed here are those of the author, a columnist for Reuters.)

By Clyde Russell

LAUNCESTON, Australia Feb 11 (Reuters) - - When is a bull market not a bull market? When it is in iron ore.

The steel-making ingredient is currently on a winning streak, with Asian spot prices .IO62-CNI=SI at 20.3 percent above the most recent low hit in December last year.

Thus iron ore sneaks into the definition of being in a bull market, having surpassed the 20 percent mark that somewhat arbitrarily designates a rally as being significant.

But looks can be very deceiving. The Dec. 11 trough of $37 a tonne was actually the lowest recorded since spot assessments began in late 2008.

The close on Wednesday of $44.50 means iron ore is a mere $7.50 away from the all-time low, with the modest gains in absolute terms providing context to the more impressive percentage rise.

Still, a savvy trader who bet on a price rise after the low will have made handy profits, something increasingly difficult to do in the new paradigm of low and volatile commodity prices.

While iron ore has had a few good weeks since mid-January, it's very unlikely that this is the start of any sustained rally, rather it's more likely an opportunity to go short again.   Continuación...