Market Verdict on Iron Ore：
· Iron ore short-run neutral.
Macro
· China’s one-year Loan Prime Rate was 3.85% in May, same as 3.85% last month. LPR 5-year was 4.65%, which was 4.65% last month as well. LPR has been “standing still” for 13 consecutive months.
· Iranian President Mahmoud Rouhani says agreement has been reached on major parts of the Iranian nuclear deal. The West has agreed to lift major sanctions against Iran, such as oil, petrochemicals, shipping, insurance and the central bank.
Iron Ore Key Indicators:
· Platts62 $210.85, -4.60, MTD $211.70.
· MySteel 45 ports iron ore inventories at 125.11 million tonnes, down 223,000 tonnes w-o-w. Daily evacuation 2.91 million tonnes, down 97,600 tonnes w-o-w. Australia iron ore 64.63 million tonnes, down 370,000 tonnes w-o-w. Brazil iron ore 37.51 million tonnes, down 2,300 tonnes w-o-w. Port ships 129 down 5 w-o-w.
SGX Iron Ore 62% Futures& Options Open Interest (May 20th)
· Futures 85,812,400 tonnes(Increase 320,300 tonnes)
· Options 76,468,000 tonnes(Increase 700,000 tonnes)
Steel Key Indicators
· China 18 EAFs construction steel mill average cost 4890 yuan/tonne, down 352 yuan/tonne. EAFs average profit 724 yuan/tonne, down 221 yuan/tonne.
· European Commission Vice President said that the European Union’s goal is to take off the US steel tariffs as soon as possible, before the end of the year. A resolution passed by the European Parliament on the 20th said that China will “freeze” discussions on the ratification of the China EU investment agreement before lifting the anti-sanctions imposed on members of the European Parliament.
· Many cement enterprises in China are about to bring in peak/non-peak production shifts in summer, and some regions actively promote peak production shift in summer or increase the time length for peak shifting production. East China actively promotes cement enterprises to stop kilns for 15-20 days during rainy season. In North China, Shanxi, Hebei, Henan, Inner Mongolia and other places, peak production shift will be carried out intensively. At the same time, according to the requirements of environmental protection control, peak shift maintenance may be added for 15 days.