Verdict:
• Short-run Neutral.
Macro:
• Several OPEC+ countries extend output cuts through Q2, as Russia announces new reductions.
Iron Ore Key Indicators:
• Platts62 $115.40, -1.70, MTD $115.40. There were some seaborne trade during late half of last week after the two extreme quiet weeks after Chinese New Year. The market was waiting for news from China politburo this week and maintained watch and see mode. Steel mills are operating with high cost inventories purchasing from January. Thus, it should be hard to see a quick pick up on iron ore purchase before mills reduce the overall cost effectively.
• FMG widened SSF discount for SSF from 6% to 7% in March, as expected from market rumors in late February. The discount for BF maintained unchanged at 5%.
SGX Iron Ore 62% Futures& Options Open Interest (Mar 1th)
• Futures 97,295,000 tons(Increase 1,331,400 tons)
• Options 105,543,600 tons(Increase 1,027,000 tons)
Steel Key Indicators:
• China 87 EAFs average operation rate at 35.61%, up 27.69% on the month, down 33.28% on the year.
• China steel mills imported iron ore at 93.33 million tons, down 1.98 million tons on the week.
Coal Indicators:
• The FOB Coking Coal index dropped by $6.5/mt during last Friday as the crowded supply at front laycans. Indonesia sellers were following the lower Chinese buyers’ bids. There were dynamic sources from Atlantic to compete with the current pacific market. The China steel mills margin were still in general low, which could limit the price acceptance currently.