This is hugely surprising given steel stocks are still very high and none of the leading indicators are particularly inspiring. While housing and infrastructure activity remains pretty good now, one might think these are at risk given government policy aimed at property speculation and credit flow.
Perhaps we are overly pessimistic about growth rates to be achieved in 2H13 in China. To be sure, policy tightening and slowdown's in recent years haven't been put in the "hard landing" basket. And tightening in these periods was been aggressive, although didn't caught the imagination of the investment community like the recent SHIBOR squeeze (probably because there wasn't a nice chart to demonstrate it).
But even if you are optimistic about China avoiding more serious problems, its hard to get around the very high level of steel inventories at present heading into a seasonally slower period.
This should eventually scupper iron ore prices, which have rallied recently as the inventory destock happened a bit too early. Coking coal, however, is unlikely to fall much further and is probably one of the more positive price stories over the next 9 months.
