Asian steel market turns. Mon Jul 26

Some interesting notes from local broker BBY have helped to clarify my view that the selling in steel and iron ore stocks might be over. They suggest that the shorters of HRC (hot rolled coil) steel at the Asian list price are, suddenly, no longer able to cover by approaching steel producers for a discount and it should mark a bottom in the steel price. They also believe that the Baltic Freight price is due to rebound and that by the fourth quarter spot iron ore price should follow this lead.
It helps to clarify what the charts are indicating and with Fortescue having continued its bounce this morning, I've added another long iron ore position in Murchison at 189. Mmx is lagging Fmg and Mgx and has confirmed a minor buy signal this morning. As with Fmg, there's enough potential for a re-rating to justify this trade, especially with a stop in the high 170s. The picture is clouded though by a June quarter production report which is due on Friday.

Overall, the market has followed strength in the US and risen 1% with commodity stocks leading the charge. I'm out of Ipl, the last bought on the open at 320, and I've also sold out of Mre at 83. Linc is up 13 cents as their quarterly activities and cash flow report confirms that they have received written offers for all three coal assets they are planning to sell.

2.16 It's been a steady sell off from the late morning highs. We're up just 19 points now. Most of my positions have edged down. I sold out the last of my Ost at 307 and some Awc at 158.

4.14 A rangy afternoon session chopped around until closing with a gain of 0.6% on the Xjo index.

Mmx didn't perform today, finishing at 187, but Fmg, Lnc and Pna all did well, as did Awc which I sold out of at 159.

I'm still quite bullish Awc and Ost but my overall exposure is on the high side.