Market Verdict on Iron Ore：
• Neutral.

 

Macro
• U.K. May CPI up 9.1%, est. 9.1%, refreshed the highest since 1982. May CPI up 0.7% from April.

 

Iron Ore Key Indicators:
• Platts62 $109.40, -6.50, MTD $133.82. Float base iron ore premium dropped massively from $2.8 to $0.45 over the last ten trading days with no bids. Mainstream iron ores didn’t saw any active buyers during this week although improving import margins. The steel margin was suffering a loss. As expected, iron ore eroded steel mills margin and made an overdraft of growth in advance. Thus, mills are currently utilising premier coking coals to increase reducibility of low grade iron ore, which could reduce cost comprehensively. The 45% tax increase on Indian pellets and previous Ukraine supply disruption to Asian countries led to a global seaborne pellets shortage, which yet to see any alternative.
• China’s iron ore imports in May rose 7.51% month on month to 92.52 million mt, customs data showed, as the rise in imports from Australia more than offset the drop in imports from Brazil.

SGX Iron Ore 62% Futures& Options Open Interest (Jun 22th)
• Futures 93,350,000 tons(Increase 2,591,200 tons)
• Options 85,568,000 tons(Increase 1,985,900 tons)

 

Steel Key Indicators
• TS billet cost at 4334 yuan/ton, down 174 yuan/ton. Average steel margin -414 yuan, down 286 yuan/ton.

 

Coal Indicators
• After Australia FOB market sharp falling over previous few weeks, buying interests emerged in the range $375- 380. In addition, the demand of India and south-eastern countries recovered according to market participants. Steel mills in northern China decreased the bids on physical price by 300 yuan.
• Five Australian states face power supply shortage. Recently, Queensland announced that from July 1, a new progressive tax rate will be implemented for coal. From 1 July, mining firms will pay 20pc royalty on prices exceeding A$175/t, 30pc over A$225/t and 40pc over A$300/t. The new rates are progressive, so coal sold at A$310/t will attract a royalty of 40pc on just the top A$10/t, with 30pc on A$75/t, 20pc on A$50/t, 15pc on A$25/t, 12.5pc on A$50/t and 7pc on the remaining A$100/t.