Verdict:
• Short-run Neutral.
Macro:
• China NBS: The industrial profit above designated scale in August reversed negative to positive number, up 17.2% on the year. Jan-Aug total down 11.7% on the year. The drop during Jan-Aug was majorly dragged by the ferrous metallurgical industry, which decreased by 57.1% on the year.
Iron Ore Key Indicators:
• Platts62 $118.30, +0.90, MTD $120.91. The negative steel margin resisted the overall growth on seaborne products. Thus, we saw a slight correction of SGX-DCE spread during this week. However, mills started to increase lump and pellets usage expecting a decrease on iron ore concentrates in short-run. Stocking for China holiday approached an end. The pig iron consumption expected to decrease in October.
SGX Iron Ore 62% Futures& Options Open Interest (Sep 27th)
• Futures 141,575,400 tons(Decrease 605,800 tons)
• Options 137,622,800 tons(Increase 1,208,000 tons)
Steel Key Indicators:
• MySteel surveyed 5 steel mills in Shanxi starting maintenance, which estimated a reduction of 22,600 tons of pig iron per day.
Coal Indicators:
• The mills in Shandong and Hebei provinces of China confirmed two rounds of price increase by 200-220 yuan/ton proposed by cokery plants.
