Market Verdict on Iron Ore：
• Neutral to bullish.
Macro
• Eurozone May adjusted CPI up 8.1% y-o-y, refreshed record high. Est. 7.8%, last 7.5%.
• U.S. president Joe Biden held a rare meeting with Federal Reserve Chair Jerome Powell to tackle decades-high inflation ahead of the November midterm and simultaneously maintain the independence on the decision of central bank.
Iron Ore Key Indicators:
• Platts62 $136.50, -0.10, May Avg $133.51. Seaborne PBF gathered interests after import margin improved significantly. Iron ore seaborne trades significantly increased on last Friday and this Monday. Rio Tinto sold few laycans of Fe61% PBF on fixed price. BHP sold JMBF discount at $9-10. However steel mills margin was in 0 area, the marginal profit of some northern mills were even negative, which resist the big spike of current materials in mid-run level. Virtual steel margin was squeezed to extreme low area because iron ore increased faster than steel.
• NDRC held conference on starting new iron ore projects to increase the domestic capacity.
SGX Iron Ore 62% Futures& Options Open Interest (May 31st)
• Futures 67,940,700 tons(Decrease 16,305,500 tons)
• Options 69,195,500 tons(Decrease 15,445,500 tons)
Steel Key Indicators
• European Steel Association indicated that European steel consumption potentially narrow 2% because of the war and supply chain disruption.
Coal Indicators
• The inverse correlation between PLV and PCI raised concerns on physical traders, relative high PCI price was believed unsustainable with alternatives for example low vol HCC, or thermal coals.
• An HCCA offer was heard at $441/mt FOB Australia, which was $9 lower compared to initial offer a day ago. PMV yet to receive any interest on the market yet. Miners consider to provide PMV on a long-term based contract.
