Market Verdict on Iron Ore：
• Neutral.

 

Macro
• President of the Cleveland Federal Reserve Bank said that it would take two years for the inflation rate to fall to the Fed’s target of 2%, adding that the inflation rate would gradually “move down” from the current level.
• The United States is considering removing some tariffs on China and suspending the gasoline tax to help curb inflation. U.S. president Joesoph Biden was planning to set up conference with Chinese chairman Xi Jinping recently.

 

Iron Ore Key Indicators:
• Platts62 $112.35, -9.80, MTD $136.84. Float base iron ore premium dropped massively from $2.8 to $0.45 over the last ten trading days with no bids. Mainstream iron ores didn’t saw any active buyers during this week although improving import margins. The steel margin was suffering a loss. As expected, iron ore eroded steel mills margin and made an overdraft of growth in advance. Thus, mills are currently utilising premier coking coals to increase reducibility of low grade iron ore, which could reduce cost comprehensively. The 45% tax increase on Indian pellets and previous Ukraine supply disruption to Asian countries led to a global seaborne pellets shortage, which yet to see any alternative.

SGX Iron Ore 62% Futures& Options Open Interest (Jun 20th)
• Futures 87,456,000 tons(Increase 2,519,200 tons)
• Options 82,581,500 tons(Increase 612,800 tons)

 

Steel Key Indicators
• 40 independent EAFs construction steel average cost 4798 yuan/ton, down 95 yuan/ton w-o-w. Average loss 143 yuan/ton w-o-w.

 

Coal Indicators
• After Australia FOB market sharp falling over previous few weeks, buying interests emerged in the range $375- 380. In addition, the demand of India and south-eastern countries recovered according to market participants. Steel mills in northern China decreased the bids on physical price by 300 yuan.
• The market committee of China Coking Coal Association held market meeting in June 20th. Major coking enterprises in Shanxi, Hebei, Inner Mongolia, Shandong, Jiangsu, Shaanxi, Jiangxi, Guizhou provinces attended the meeting. The participating enterprises unanimously agreed to adhere to the principle of no production at loss and no sales without profit, comprehensively limit production and suspend coal procurement till the prosperity of industry returned.