Daily Virtual Steel Mill Report 14/1/22
Market Verdict on Iron Ore：
• Neutral to bearish.
Macro
• U.S. Federal official Harker indicated that the Federal potentially increase interest rate by 25 basis points after decreasing the debt purchase in March.
• Chinese Academy of Science estimated that China GDP growth rate in the year 2022 at 5.5%. In addition the growth rate expected to be higher in the second half of the year.
Iron Ore Key Indicators:
• Platts62 $127.95, -3.65, MTD $126.32. Iron ore corrected after many institutes estimated the potential impact of Brazil iron ore shipments. In addition, Vale, CSN and Ango America all stated the weather impact was already included in their annual prediction of shipments. February and early March laycans were very active since stocking before after Chinese New Year. Thus front spreads were narrow, however back spreads started from March- April were becoming wider. However April to some extent potentially undervalued compared with March, as they were in similar time period. March would be the more volatile month compared with February as first half of February were impacted by Asian New Year.
• Pilbara port authorities statistic indicated that port Hedland export total 50.8 million tones of iron ores in December, up 17.1% from November, up 9.3% y-o-y. Export to China 42.12 million tones, up 15.4% from November, up 5.4% y-o-y.
• MySteel 45 ports iron ore inventories at 156.97 million tonnes, up 920,900 tonnes w-o-w. Daily evacuation 3.12 million tonnes, down 54,700 tonnes w-o-w. Australia iron ore 73.84 million tonnes, up 1.56 million tonnes w-o-w. Brazil iron ore 55.27 million tonnes, down 173,200 tonnes w-o-w. 167 ships at ports, up 6.
SGX Iron Ore 62% Futures& Options Open Interest (Jan 13th)
• Futures 81,582,100 tonnes(Increase 553,500 tonnes)
• Options 41,961,800 tonnes(Increase 1,772,500 tonnes)
Steel Key Indicators
• 18 China individual EAFs average construction steel cost at 4817 yuan/tonne, up 93 yuan/tonne w-o-w. Average profit -119 yuan/tonne, down 83 yuan/tonne.
• Tangshan average billet cost 4139 yuan/tonne, up 128 yuan/tonne w-o-w. Average steel margin 231 yuan/tonne, down 18 yuan/tonne w-o-w.
Coal Indicators
• Northern and North-western areas of China increased 200 yuan/tonne on prime coke, the total growth over past two week accounted for 700-720 yuan/tonne.
• China average coke profit margin at 218 yuan/tonne. Prime coke margin 243 yuan/tonne.