Market Verdict on Iron Ore：
· Iron ore short-run neutral.
Macro
· U.S. Federal meeting said if the economy continues to grow rapidly, it is appropriate to start discussing reducing the scale of bond purchase “at some time”, with mentioning the monetary policy. U.S. Treasury bonds corrected and traders raising expectations for the Federal Reserve to raise interest rates.
· China PM, Li Keqiang, presided over the executive meeting of the State Council and deployed to ensure the supply and control the price of commodities.
1 Take multiple measures to strengthen the regulation of supply and demand. Implement policies such as increasing export tariffs on some iron and steel products, implementing zero import provisional tax rates on pig iron and scrap steel, and abolishing export tax rebates on some iron and steel products, to increase of domestic market supply.
2. Engage in rich coal resources, encourage major coal enterprises to increase production and supply. Increase output of wind power, hydropower and nuclear generated electric power.
3. Strengthen the linkage of the futures and spot commodity market, and investigate in abnormal transactions and malicious speculation.
4. Maintain the stability of monetary policy and the basic stability of currency.
Iron Ore Key Indicators:
· Platts62 $215.45, -8.30, MTD $211.78. PBF traded at a fixed price at weekly high yesterday at $219.5, calculated to $223.1 based on 62% ferrous content. Seaborne massively climb yesterday.
· BHP has achieved first ore at its $3.6 billion South Flank mine in the central Pilbara, Western Australia. South Flank is an 80 Mtpa sustaining mine, and will be the most technically advanced high quality iron ore mine in Western Australia, the miner says together with the existing Mining Area C, it will form the largest operating iron ore hub in the world -– producing 145 million tonnes of iron ore each year.
SGX Iron Ore 62% Futures& Options Open Interest (May 19th)
· Futures 85,492,100 tonnes(Increase 1,365,900 tonnes)
· Options 75,768,000 tonnes(Increase 350,000 tonnes)
Steel Key Indicators
· CISA Conference: the participants agreed that Platts index has long existed the problems of small sample size, lack of disclosure and transparency. At the same time the index was financialized, which seriously deviated from its spot pricing. They participants appeal to change this pricing, and find alternative pricing index.
· MySteel Rebar Inventory: Rebar production 3.71 million tonnes, down 0.25% w-o-w. Mills inventory 3.03 million tonnes, up 3.93% w-o-w. Circulation inventory 7.81 million tonnes, down 9.72% w-o-w.
· Tangshan 10 sample steel mills pig iron before tax 3613 yuan/tonne, billet cost 4527 yuan/tonne, up 297 yuan/tonne w-o-w. 