Verdict:
• Short-run Neutral.
Macro:
• The Panama Canal Authority announced on August 5th that the maximum draft standard for ships passing through the canal will be raised to 49 feet from today. This standard has been raised again after being increased to 48 feet on July 11th, 2024. The Canal Authority explained that as Panama enters the rainy season, the lakes connecting the canal gradually reach their optimal water levels. At the beginning of this month, the Panama Canal Authority announced that it would increase the daily vessel traffic of the Panama Canal to 35 ships from August 5th, and further increase to 36 ships from September.
• The US Energy Information Administration (EIA) has raised its forecast for US oil demand in 2024 by 100,000 barrels per day to 20.5 million barrels per day in its Short Term Energy Outlook report. EIA has lowered its forecast for US crude oil prices this year to $80.21/b, which is 2.2% lower than the previous forecast of $82.03/b.
Iron Ore Key Indicators:
• Platts62 $102.30, -1.80, MTD $103.06. BHP sold JMBF for $7.5/mt discount based on September index. Vale sold IOCJ at $117.6/mt, which was almost absent in July market. The maintenance of China steel mills in August resisted the premium concentrates demand. Discount iron ores and alternatives were popular in July and August, in particular when landing margin and steel margin were both low.
SGX Iron Ore 62% Futures& Options Open Interest (Aug 6th)
• Futures 111,202,900 tons(Increase 192,600 tons)
• Options 140,946,500 tons(Increase 2,275,000 tons)
Steel Key Indicators:
• Vietnam steel mill Hoa Phat cut price by $30 for SS400 and SAE 1006 HRC to $530/mt delivered on September and October.
Coal Indicators:
• The FOB Australia coking coal price correction slowed down from past week. However, the resales from European steel mills resisted price.
