COLUMN-Iron ore rallies on small BHP output deferral? Ridiculous: Russell
--Clyde Russell is a Reuters columnist. The views expressed are his own.--
By Clyde Russell
LAUNCESTON, Australia, April 23 (Reuters) - While it's well-known that markets can have irrational short-term moves, the 4 percent jump in Asian spot iron ore on Wednesday must be a more extreme case.
Spot iron ore .IO62-CNI=SI jumped to $52.90 a tonne from $50.80 on April 20, continuing its rally from the record low of $46.70 reached on April 2.
On the surface the catalyst for Wednesday's spike was BHP Billiton's announcement that it would defer an expansion of its output of the steel-making ingredient from 270 million tonnes a year to 290 million tonnes.
The future loss of 20 million tonnes from a market that's oversupplied by multiples of that amount clearly isn't a sound basis for a price rally.
What it does show is a market where many participants are keen to call a bottom, and are happy to grasp onto any positive news as justification for a price rally.
It also shows that many in the market weren't really reading into this week's quarterly production reports from BHP Billiton, Rio Tinto and Brazil's Vale. Continuación...