Market Verdict on Iron Ore：
• Neutral to bullish.

 

Macro
• China Ministry of Commerce: at present, logistics disruption is gradually improving. Ensure domestic transportation of foreign trade goods and continue to alleviate the pressure of international logistics.
• U.S. FOMC in May notes: most of the federal officials supported 50 basis points hike in the next few monetary conferences. However the probability of interest hike in September drop from 80% to less than 40%.

 

Iron Ore Key Indicators:

• Platts62 $131.25, -2.15, MTD $133.07. 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 134.54 million tons, down 1.05 million tons w-o-w. Daily evacuation 3.18 million tons, down 126,600 tons w-o-w. Australia iron ore 62.17 million tons, down 921,000 tons w-o-w. Brazil iron ore 46.03 million tons, up 288,000 tons w-o-w. 95 ships at ports, down 9.

SGX Iron Ore 62% Futures& Options Open Interest (May 26th)
• Futures 81,553,100 tons(Decrease 104,500 tons)
• Options 77,703,500 tons(Increase 690,000 tons)

 

Steel Key Indicators
• Japan’s biggest steelmaker Nippon Steel will need to pass on the sharp cost increase to end-users including carmakers. The average steel price doubled in Japan over the past year from 65,000 yen to 130,000 yen.
• China 40 EAFs average steel cost 4800 yuan/ton, down 153 yuan/ton. Average profit -62 yuan/ton, up 25 yuan/ton.

 

Coal Indicators
• More tractable coking coal sales from U.S. flow into Atlantic and Asian market, drag down the performance of PMV Australia market, however increased the price width among brands.