Any old iron (continuing on from 19th February 2014) - Defaults contributing to Defaults

Continuing on from Any old iron...overcooking, production & ignorance 19th February 2014

It would appear there were a few trades that caused the tank on Iron Ore overnight. Without adding the fear factor, this was one of the most predictable trades of 2014 and I suspect will the all-time trade of 2014 for those whom had been stacking positions for near 3 months.

So the consequences mean that the larger producer positions may be better hedged, but the Chinese are notoriously bad traders in my opinion, utilising childish methods of double or quits. The important element will be how this depreciation will impact on other types of credit available as fear sets in. This for me was a strong signal to close longs on Nickel.

The reason for the tank in my view is the forced liquidation by a couple of larger Chinese traders, its also common-knowledge that their are one or two steel mills on the brink of default and this has been exacerbated by the price drop. A very reliable piece of gossip that one of our well known 'big boy' traders is out of profit (large loss) due to the tank, I'd love to know how someone can lose near $1B on this...perhaps someone can educate me because I'm certainly too retarded to think how one could ever become over-exposed. 

With so much leveraged off so little in the Iron Ore market (especially in China) this house of cards could be very significant in terms of the global supply and demand. Obviously analysts will say they knew it was coming, but their previous commentary that caused splinters for being on the fence so long suggests they were hedging their bets. 

Personally, new to this area of trading (but not without beta testing my trades for 18 months) I cannot predict the supply and demand variables for the short-term. Personally, I don't think most can, as the defaults are merely rumour at the moment, but also in part validated by the Iron Ore Tank *(scuse the pun). 

As a side thought, my targets for 2014-2015 were met overnight, normally as a price goes in my favour and gets closer to my target price I lock profits in. It moved so fast, I was unable to but closed my positions at circa 105.50. Reece, you may want to consider, if you haven't already looking at locking in some of your profits from AAL and any other miners you have positions. My closing of positions is for two reasons: unpredictably now and all positions hitting my maximum position target to derisk/close.

All the best, Fraser