Market Verdict on Iron Ore：
• Neutral.
Macro
• U.S. December non-farm payrolls increased by 199,000 new jobs , est. 444,000, last 210,000. The statistic indicated that the Federal commission strengthen the expectation of unwinding the balance sheet and increasing interest rate.
• China RCEP hit the ground on January 1st of the year 2022, including 10 countries, symbolized the world biggest free trade treaty started, and a promising economic prospect of China.
• China CITIC securities expect the first half year of the 2022 would become a interest rate decreasing window for China. Estimated 7 day repo, 1 year MLF, 1 year LPR and 5 year LPR down 5 bp respectively at 2.15%/2.9%/3.75%/4.6%.
Iron Ore Key Indicators:
• Platts 62%: $127.30 (-0.95) MTD $124.66. JMBF and MACF discounts both improved over the previous week, and maintained much popular on both ports and seaborne compared to PBF and NMF. SP10 has no more pressure to JMBF as SP10 was oversupplied in major eastern ports. IOCJ arrival was very light compared to previous year in particular during the previous 4-5 weeks, as a result Fe65% – 62% potentially expand or maintain wide during the next few trading days. Major China steel mills indicated that they had already finished 90-100% of the iron ore purchase prepared through Chinese New Year.
SGX Iron Ore 62% Futures& Options Open Interest (Jan 7th)
• Futures 79,034,900 tonnes(Increase 1,300,700 tonnes)
• Options 38,793,500 tonnes(Increase 70,000 tonnes)
Steel Key Indicators
• Tangshan billet cost 4011 yuan/tonne, up 34 yuan/tonne w-o-w. Average steel margin 249 yuan/tonne, down 444 yuan/tonne w-o-w
Coal Indicators
• According to Mysteel, China coking capacity is planned to be eliminated by 54.93 million tons in the year 2022, the planned new coking capacity is 71.6 million tons, and the net new coking capacity is expected to be 16.67 million tons. Considering the impact of reducing the “two high pollution projects policies”, the coking capacity is expected to reach 550 million tons by the end of 2022, the output of metallurgical coke is expected to be 421 million tons in 2022.
