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China re-Opening and the many unknowns. The respective prices of iron ore and steel scrap metal are normally a pretty good guide as to the direction that steel prices will soon take: and both have been rising in recent months. As our Steel Raw Materials chart shows, after dipping to $77 m/t last November, Australian iron ore has now rallied to $128 m/t. Meanwhile, the London Metal Exchange (LME) price for Turkey steel scrap has lifted from its November level of $354 m/t to its current $432. Copper – known as Dr Copper because its price is considered a good gauge of the health of the world economy – has also risen by 18% on the LME since November. Most of this buoyancy is predicated on the so-called “China Re-Opening” theory where the world´s second largest economy is (apparently) going to spring back into life now that the shackles of Covid have been cast aside.

The expectation is that Chinese steel inventories will be rapidly replenished as demand and supply-side support is given to the nation´s ailing property market. Analysts also speak of huge pent-up consumer demand in China, with the population eager to buy goods and to travel after two years spent indoors. The China Re-Opening effect is being seen by many as a panacea for all the global economic woes caused by the pandemic. China to save the world! As its economy flourishes, so too will those of its many trading partners – especially the USA. However, life is not always so straightforward, as the US Secretary of Defense, Donald Rumsfeld, revealed in 2002 while admitting a lack of evidence linking Iraq to weapons of mass destruction. He confused many people – though not himself – by declaring there are things that “we know we don´t know”, but there are also things that “we don´t know that we don´t know”. The so-called “unknown unknowns”.

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