Market Verdict：
– Iron ore neutral.
Macro Market Change and Money Movement:
– China commodity market experienced an interest shift from agricultural sector to industrial sector from last Thursday to this Tuesday, contributed by the strong performance of coking coal and iron ore.
– The G7 conference yet to mention any detail on the solution of global vaccination allocation as well as further step to resolve the pandemic, which potentially slowed down the economy recover global wide as well as disappointed the supply chain recovery process on commodities in next half of the year 2021.
Iron ore Market :
– The supply irritation contributed the big spike of iron ore during the current two weeks. Previously Vale miner suspension impacted about 1.21 million tonnes of iron ore production. China Shanxi miner accidents impacted 600,000 of pellitising iron ores. Both were said “temporary impact”. In this case, the overall impact was potentially neutralized by the increase of shipments as well as some inventories at miners and ports.
– Global ports data suggested that Australia delivery in the first week of June was only 60% of the average of May, which would cause some mid-grade shortage on the mid-June calculating the laycans. However Australia delivered 11.3% more iron ores in May compared to April. Brazil delivered 12.84% more iron ores in May compared with April. Both Australia and Brazil tend to deliver more iron ores in coming few months.
– Virtual steel mills margin narrowed from 1457 yuan/tonne to 788 yuan/tonne, almost decreased by 50%. Some norther physical sources heard some mills started to stock some low grade concentrates and prepare to shift furnace input if a further decrease on steel margin.
Steel Market:
– Hebei province entered a harsh restriction mode since early June, which was the last month before the 100 Anniversary of China Party. Nation-wide safety inspection on miners and industrial enterprises due to several accidents with casualties happen in the current two months. The daily pig iron production reached a theoretical roof at 2.44 -2.45 million tonnes, which was the highest level of the year. This number potentially come down as the following rainy weather in eastern areas and southern areas.
– U.S. mid-west HRC tripled from the lowest level during the March 2020. U.S. HRC June contract average price in May at $10557.36/tonne, up 2.46% from May average, which was much slower growth rate compared to May and April. During mid-May 2021, China Shanghai HRC up 83% compared to the lowest of last year. However Shanghai HRC also corrected massively by 15.8% from the high. China has bigger steel inventories, which was the biggest supply market as well after pandemic recovery. As a result China was late respond to the global spike of steel price. The marginal growth rate of steel price decrease in global market potentially mean a reverse and correction in China market.
– It is worth noticing that MySteel data indicated construction steel apparent consumption dropped by 20% from the high at 5.37 million tonnes per week, which could be an early signal to predict market demand was decreasing.