China steel and iron ore solid in mid-Dec

Chinese steel production has maintained decent growth in mid-December, although the comps are a little confusing thanks to apparent under-reporting last year.  Nonetheless, conditions look pretty stable for iron ore, with steel demand solid and inventories not particularly high, particularly in light of seasonal supply disruptions.

The CISA assessment of crude steel production was flat from the first 10-days and up ~5%YoY. Growth is perhaps weaker than this given there was some under reporting of production into the end of 2012.  But this probably isn't too dramatic, with other markers like inventories at steel traders and mills still pretty low.

Cyclones and wet weather are now starting to affect iron ore availability from the seaborne market and should curb the rate of stock building in the coming months.  This should keep iron ore pricing high, as while stocks have been rising, they are not particularly high.