Market Verdict on Iron Ore：
• Neutral.
Macro
• Opec and Non-Opec oil production countries decided to increase 648,000 barrels of crude oil production in August.
• Global central banks revealed that inflation control was the most important thing although the process potentially eliminate the economy growth.
Iron Ore Key Indicators:
• Platts62 $120.10, -3.10, Jun Avg $130.00. PBF saw improving trade activities in seaborne market. The physical July and August iron ore structure become contango since market participants believed that the bottom of the market was approaching. Chinese steel mills expect margin could recover with initiative control on production in June and July. Thus, Chinese blast furnace utilisation rate expected to drop in the coming few weeks. BHP narrowed term contract discounts for July JMBF from 11% to 9.25%, widened discount for MACF from 2.75% to 4%. Silicon penalties in 4.5-6% range dropped from $4 to $3, suggesting mills tolerance on variety of brands, to comprehensively decrease the cost of materials.
• MySteel 45 ports iron ore inventories at 126.26 million tons, up 539,300 tons w-o-w. Daily evacuation 2.83 million tons, down 114,200 tons w-o-w. Australia iron ore 59.40 million tons, up 998,700 tons w-o-w. Brazil iron ore 41.53 million tons, down 901,700 tons w-o-w. 96 ships at ports, up 6.
SGX Iron Ore 62% Futures& Options Open Interest (Jun 30th)
• Futures 74,788,000 tons(Decrease 22,956,800 tons)
• Options 72,790,200 tons(Decrease 17,498,300 tons)
Steel Key Indicators
• MySteel 40 sample EAFs average cost 4440 yuan/ton, up 161 yuan/ton w-o-w. Average loss at 106 yuan/ton.
Coal Indicators
• JSW didn’t award the FOB PLV bids because the offer and bid disparity reached as wide as $46.
• The second round of Chinese coke cut postponed, market sentiment warmed.
• Few Shanxi steel mills started the second round of coke price cut by 200 yuan/ton, however there was some conflictions on the views regarding the cut.
