Market Verdict on Iron Ore：
• Neutral to bullish.

 

Macro
• The minutes of the ECB meeting showed that ECB members were generally worried about high inflation data. The ECB should end its asset purchase program “in the first few weeks of the third quarter” and raise interest rates “for some time afterwards”.
• The number of initial jobless claims in U.S. unexpectedly increased by 21,000 last week, to 218,000 on a seasonally adjusted basis, the highest since January, which may indicate that the demand for workers has cooled. As of the week of May 7, the number of people who continued to apply for unemployment benefits decreased by 25,000 to 1,317,000.
• China PBOC: 5-year Loan Prime Rate decreased to 4.45%(down 15 bp). 1-year LPR unchanged.

 

Iron Ore Key Indicators:
• Platts62 $129.40, +2.80, MTD $132.88. Seaborne PBF obtained growing interests, in particular after price correction. However buyers are still preferring MACF. China MACF at port areas decreased fast. South Flank mines expected to ship more MACF to China. 65-62 spread remained narrow around $23 because of the thin steel margin. Some traders indicated that mills resold Carajas fine considering the cost. SSF discount narrowed for consecutive months while SSF/PBF ratio also narrowed, indicating the low grade fines are favorable options for end-users to optimise cost-efficiency.
• MySteel 45 ports iron ore inventories at 135.58 million tons, down 4.37 million tons w-o-w. Daily evacuation 3.31 million tons, up 94,000 tons w-o-w. Australia iron ore inventories 63.09 million tons, down 1.89 million tons w-o-w. Brazil iron ore inventories 45.74 million tons, down 903,000 tons w-o-w. 104 ships at ports, up 13.

SGX Iron Ore 62% Futures& Options Open Interest (May 19th)
• Futures 77,615,700 tons(Increase479,900 tons)
• Options 75,378,500 tons(Increase 119,000 tons)

 

Steel Key Indicators
• Tangshan billet cost 4664 yuan/ton, down 57 yuan/ton w-o-w. Average profit – 144 yuan/ton, down 63 yuan/ton.

 

Coal Indicators
• The Australia FOB and CFR China disparity had increased by $26 in the current two days. Australia FOB price was supported by the firm bids to chase the June tenders. China saw improved sentiments in Shanxi by significantly increased volume. However China eastern and northern mills were resisting the purchase price on coking coal.