Market Verdict on Iron Ore：
• Neutral.
Macro:
• Chinese October Manufacturing PMI 49.2, last 50.1. Non-manufacturing PMI 48.7, last 50.6.
• Euro zone Q3 GDP growth rate 0.2% from Q2, est. 0.1%, last 0.8%. Eurozone October adjusted CPI up 1.5% on the month, est. 1.2%, last 1.2%. Eurozone October inflation rate refreshed highest since 1997.
Iron Ore Key Indicators:
• Platts62 $79.50, -2.35, MTD $92.43. Iron ore corrected massively last week, because of the sharp drop on steel margin and expected lower pig iron demand in the month ahead. NMHG was sold at $81.2, BRBF was sold at $82.2. The correction has already attracted bottom fishing traders. Thus, fixed-cargoes liquidity remain healthy.
• 5 out of 25 blast furnace of Tangshan started maintenance, or a decrease of 21,600 pig iron production. However some mills actively cut production concerning the low margin and weak downstream demand.
• FMG narrowed discount of FBF from 5% to 4.5% in November, SSF unchanged at 8%, WPF narrowed from 3.5% to 2%.FMG discount maintained liquid at portside of China. However mills indicated that the current SSF with 8% discount has no cost advantage compared with other brands, the narrowed discount represent the stable quality and supply.
SGX Iron Ore 62% Futures& Options Open Interest (Nov 1st)
• Futures 102,748,900 tons(Increase 2,506,900 tons)
• Options 95,619,400 tons(Increase 2,900,000 tons)
Steel Key Indicators:
• India PM Narendra Modi indicated that India was targeting to double the steel capacity from 154 – 300 million tons in next 9-10 years.
Coal Indicators:
• FOB Australia coking coal surprisingly up 4.5$ to $311.5 last Friday, although during the huge correction in ferrous complex globally. The market participants indicated that the PLV above $300 was supported by the lack of supplies. China buying interests for U.S. low volatility coking coal ranged from $270- 330. U.S. suppliers wouldn’t consider the opportunities at lower range given the high freight cost.
