FIS Daily Physical Review Jun 22nd

Iron Ore and Steel Market Updates
–  The low grade fines and discounted fines are becoming higher versus major brands iron ores, indciated steel mills are thinking of controling production cost.
– China Jan – May cement production at 769 million tonnes, down 8.2% y-o-y. However may cement production at 249 million tonnes, up 8.6% y-o-y, the highest single month of cement growth rate historically.
–    Sichuan Province, China, is planning to build and operate 29 new EAFs with total investment of 47.29 billion yuan.
–    Steelbank: construction steel inventories at 6.8 million tonnes down 2.07% w-o-w. HRC invnetories at 1.81 million tonnes down 8.68% w-o-w.

Macro
–    China one-year loan prime rate at 3.85%, unchanged from last time and fall in expectation. Analysts expected the next interest cut windown will be in August.

SGX Iron Ore 62% Futures& Options Open Interest(Jun 19th)
– Futures 70,972,000  tonnes(increase 46,800 tonnes)
– Options 117,169,100 tonnes(increase 875,000 tonnes)

Verdict
– Short-term neutral to bearish. (by Hao Pei)

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