Source: Bloomberg

China’s inventory of iron ore has doubled during the past two years. January 2016 Iron ore imports meanwhile were 60% higher than the January 2015 level.

As the chart indicates, Chinese buyers may have accelerated purchases of iron ore as the RMB declined against the US dollar, locking in lower prices. Now that China’s construction boom appears likely to cool and China’s currency has stabilized, currency-driven purchases of iron more might abate.

The iron ore futures price surged from $420 per 100 metric tons last March to over $700 today. That was great for the Brazilian stock market. There’s a good case, though, for a modest decline in Chinese imports, which could cause a selloff in iron ore prices.