Market Verdict on Iron Ore：
• Neutral.
Macro
• U.S. July CPI up 8.5%, last 9.1%, est. 8.7%. China July CPI up 2.7 on the year, last 2.5%, est. 2.9%.
• Chinese machinery sales in July turned from negative to positive, ended a negative number last for previous 14 months. Jan – Jul machinery sales 161,033 units, down 33.2% on the year.
Iron Ore Key Indicators:
• Platts62 $108.40, -0.40, MTD $108.89. The current market interests were centered around mid-grade including PBF and NMF, because of the cost-efficiency and production recovery in China. In addition, the demand raw materials recovered significantly in southeastern mills. The term contract discounts for FMG and BHP in August widened. However be aware of PBF was slight oversupplied in seaborne market, which might limit the room of growth in the near future.
SGX Iron Ore 62% Futures& Options Open Interest (Aug 10th)
• Futures 93,872,200 tons(Increase 478,000 tons)
• Options 89,635,500 tons(Increase 2,070,000 tons)
Steel Key Indicators
• Tangshan mills billet cost 3681 yuan/ton, down 17 yuan on the week. Profit margin 49 yuan/ton.
Coal Indicators
• The first round of physical coke price rise by 200- 240 yuan will be fully implemented during Aug 9-10th.
• Indonesia punished 29 coal exporters who failed to meet their domestic market obligations(DMO).
