Market Verdict on Iron Ore：
· Iron ore short-run neutral.
Macro
· On the morning of May 23,China National Development of Reform and Commission and other five departments jointly held a meeting interview key enterprises with strong market influence in iron ore, steel, copper, aluminum and other industries, with the participation of the Iron and Steel Industry Association and the Non Ferrous Metal Association. The meeting suggested the relevant regulatory authorities would closely track the trend of commodity prices, strengthen the linkage of commodity futures and spot markets, and “zero tolerance” for illegal speculation or activities. They will continue to intensify law enforcement and inspection, investigate abnormal transactions and malicious speculation, and resolutely and severely investigate and deal with them in accordance with the law.
· President Biden’s team has proposed to reduce the size of Biden’s infrastructure and employment plan by 25% to $1.7 trillion, hope to win the support of Republicans who tried to limit the size of Biden’s plan previously. A Republican senator said there was a more than 50% chance of reaching an agreement with the president, describing the next two weeks as a “critical” period for the talks, but said the spending bill was unlikely to pass in both houses by July 4th.
Iron Ore Key Indicators:
· Platts62 $200.10, -10.75, MTD $210.88. No seaborne trades almost during the late half of last week. Port bids with very small size, since most of traders didn’t want to take the cross weekends risk, in case new policies coming out.
SGX Iron Ore 62% Futures& Options Open Interest (May 21st)
· Futures 87,031,000 tonnes(Increase 1,218,600 tonnes)
· Options 76,583,000 tonnes(Increase 115,000 tonnes)
Steel Key Indicators
· Tangshan billet total down 150 yuan/tonne across weekends, which was slower than expected. However different type of steels were discounted significantly concerning the sales flow risk if market dump in the following week.
· Steelbank construction steels inventory 6.19 million tonnes, down 3.24% w-o-w. HRC inventories 2.32 million tonnes, down 5.52% w-o-w.
· World steel association indicated April global crude steel production 170 million tonnes, up 23.3% y-o-y.
· Korea rebar inventory was only 80% compared to previous year. At the same time, the biggest rebar provider Hyundai Steel stopped operation from May 10th after some accidents. This mill provide 10% of Korean rebar roughly. Scrap used to produce rebar up 80% y-o-y. 