Market Commentary
Iron ore extended its losses on Monday as investors weighed supply and demand, while casting a watchful eye on China’s Communist Party plenum. Iron ore port inventories rose for a seventh consecutive week last Friday to hit an 8-month high. In addition, there are growing signs that the strength of demand is wavering as last week’s Mysteel survey showed that steel inventories declined at a much slower pace. Adding to the pains is that the winter season is fast-approaching where construction activities will typically slow down, and steel demand is likely to be weak. On top of that, fresh environmental curbs have been put in place since last Friday following a level-2 pollution alert in the Tangshan region. About 26 steel mills in the region are believed to be faced with production curb or suspension
Meanwhile, China’s Communist Party plenum will convene this week as party officials will meet and lay out the blueprint for economic and social development targets for 2021-25. For steel-watchers, the focus will be on economic growth targets and goals for urbanization, and how ambitious its plans to reduce carbon emissions will be and what impact it will have on heavy industries. President Xi Jinping is also likely to unveil a longer-term plan for the next 15 years, called “Vision 2035”.
Futures in Singapore were under pressure in London morning. Having closed around 113.5 on Friday, Nov was seen trading down from 112.5 to 112.15 while Dec traded as low as 109.0 during the early morning DCE session. After the close, iron ore recovered, with Nov trading up to as high as 112.6. Spreads also narrowed across the board, with Cal21/22 around 12.8 (vs 12.9 as per last Friday). Q1/Q2 was also down 15 cents to 6.05. Nov/Dec traded at 2.7 early in the morning but since widened back to around 2.8. Nov/Q1 traded at 7.4 and Dec/Q1 traded 4.8 and a decent chunk at 4.7.
Physical Trades
Platform
Rio Tinto, Beijing Iron Ore Trading Center (Corex), 170,000 tonnes of 61% Fe Pilbara Blend fines, traded at $111.95 per tonne cfr China, laycan November 25-December 4.
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https://fisapp.com/wp-content/uploads/2020/10/Iron-Ore-Report-26102020-Eng-Chn.pdf
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