Market Commentary
Iron ore futures were heavily sold off on Thursday as China raised steel export tariffs as it seeks to achieve the twin goals of capping capping domestic production and taming the surging raw material prices that have fanned concerns about inflation. Starting from 1 August, China will raise the export tax on high-purity pig iron from 15% to 20% while tax on ferrochrome is also due to increase from 20% to 40%, according to the latest announcement by the country’s Ministry of Finance. “The raising of export tariff of the steel products is to help [the] nation’s iron ore primarily used in meeting domestic demand,” Wang Guoqing, research director at the Beijing Lange Steel Information Research Centre, told the Global Times on Thursday. On top of that, China Iron and Steel Association (CISA) vowed on Thursday to accelerate development of domestic iron ore source and the construction of overseas iron mines invested by Chinese companies in order to secure the country’s iron and steel supply during the 14th Five-Year Plan 2021-2025. Furthermore, investors are becoming increasingly concerned that the steel output cuts may extend to more Chinese provinces, which has led to higher steel prices but dwindling demand for the steelmaking ingredient. Physical traders are thought to be struggling to sell cargoes as uncertainties over further output cuts have dampened buyers’ interest. Meanwhile, total rebar inventory fell marginally for a third week to 11.33 million tonnes, or -0.18%.
Futures in Singapore sank to $190 in early London and had since been on recovery mode. Aug was seen trading up from 190.0 to above 193.50. Spreads were all over the place, with spreads hammered in Asia before recovering in London. Cal 22/23 was heard trading 32.75. Aug/Sep traded down to 2.8 and then rebounded to trade 3.0 and 3.1 before getting sold again to as low as 2.9. Aug/Oct and Aug/Q4 traded at 6.25 and 10.4, respectively while Sep/Q4 traded at 7.2.
Physical Trades
Platform
Corex traded 90,000 mt of Jimblebar fines + 80,000 mt of Mac fines at AM Aug 62% index -$4.40/mt, for Aug 1-10 loading.
Click below link to open today’s Singapore Iron Ore Report
https://fisapp.com/wp-content/uploads/2021/07/Iron-Ore-Report-29072021-Eng-Chn.pdf
For more information please contact
FIS Iron Ore Desk
ferrous@freightinvestor.com
London Number +44 (0) 207 090 1120
Singapore: +65 6535 5189
Shanghai: +86 21 6335 4002