Steel and iron ore limit down!

Not much to add really, the title speaks for itself (limit down is -4% for rebar and Dalian iron ore). Singapore contracts are also trading under $80. This is getting very ugly for Australia now. I scarcely want to imagine where spot will finish up tonight, but unless there’s a big recovery in paper markets this afternoon, it’ll be below $80.

The Federal budget in May forecast iron ore at $100, a price many commentators thought was overly pessimistic (thus allowing the crafty Treasurer to claim a ‘surprise’ revenue beat). Well, triple figures looks like a dream from where we are today. And let us not forget the three ring circus that is the WA budget, which forecast iron ore at $122 across FY2015. There will have to be a substantial redistribution of GST revenues given the ruinous WA budget, which will further weigh on the Federal budget.

I said it at the time, the Coalition chose a fiendishly bad moment in Australia’s history to assume the reins in Canberra, considerably worst than Labor in 2007.

It’s a shame our house prices are so high relative to incomes, as they add yet another layer of risk to the unfolding Australia bust.

Update 1

Unfortunately there was no recovery in paper markets this afternoon.

Here’s the daily Reuters piece. It’s a bloodbath, basically.

Update 2

Spot down to $79.80, now off 40.5% this year in USD terms. More from FT.

Only sliver of good news is that AUDUSD is still getting pumped, meaning spot is now down 40% in AUD-terms, after exceeding USD-denominated losses for most of the year. Thank the almighty Fed for the USD rally, Nev.