Ferrous Market Updates
– BHP narrowed JMBF discount from 7% in June to 4.5% in July, Yandi discount from 5.5% to 3.5%. MAC fines discount unchanged at 0.5%. The adjustment on discount is due to enhancement on ferrous, silicon and aluminum.
– Brazil iron ore shipments to China significantly increase in June. In addition, northern Brazil recovered shipments of high grade ores. IOCJ was traded in a floating basis this week instead of fixed price past three months, indicating high grade has potentially reached a roof area.
– Platform physical ores traded actively this week, however no aggressive trades with high premium. Some traders said they are reluctant to have more inventories on hand at this timing.
– China national energy agency printed draft to reduce coal and coke consumption to 57.5% in the year 2020. (year 2019 57.7%, year 2018 59.2%)
– Iron ore in the morning spiked since some rumors saying Indian government considered customs duty hike on products exported from China. Thus market concerning the tight trade relation between China and India.
– Ganggu Construction Steel Inventory: production 2.10 million tonnes, up 0.65% w-o-w. Mills inventory 2.29 million tonnes, up 3.61% w-o-w. Circulation inventory 3.75 million tonnes, up 0.39% w-o-w.
SGX Iron Ore 62% Futures& Options Open Interest(Jun 23rd)
– Futures 72,597,200 tonnes(increase 444,500 tonnes)
– Options 117,749,100 tonnes(increase 10,000 tonnes)
Verdict
– Short-term neutral.