Market Verdict on Iron Ore：
· Neutral.
Macro
· Sun Hui, deputy director of the Shanghai headquarters of the People’s Bank of China: develop the RMB settlement in crude oil, iron ore, grain, rubber and other bulk commodities, overseas contracted projects and other key fields, as well as start to breakthrough on the new settlements from major enterprises such as government-owned and state-owned enterprises.
· U.S. Federal Reserve Chairman Powell said on the 27th that if the overall U.S. economic development meets expected targets, it may be “appropriate” for the Federal Reserve to start reducing its asset purchase plan this year, but it will take some time to raise interest rates.
· A prediction report from U.S. White House expected the Half Year Deficit of government budget reached 3.12 trillion U.S. dollars, down 555 billion U.S. dollars from previous budget prediction in this May.
Iron Ore Key Indicators:
· Platts62 $159.05, +5.70, MTD $159.68.
· Mysteel researched 247 blast furnace operation rate at 74.22%, up 0.65% w-o-w. Utilisation rate 85.3%, down 0.17% w-o-w. Daily pig iron production 2.27 million tonnes, up 4,600 tonnes.
· Last week China 71 EAFs average utilisation rate at 61.16%, down 0.44% w-o-w. EAFs average profit at 361 yuan/tonne.
· According to China Metallurgical and Mining Enterprises Association and China scrap Iron and Steel Association, by 2025, China’s scrap ratio in steel making process will reach 30% and the usage rate of domestic iron ore will reach 25%. According to this calculation, compared with China’s import of 1.17 billion tons of iron ore in 2020 and foreign dependence of more than 80%, the import of iron ore at the end of the 14th five year plan will be reduced by about 400 million tons, and the foreign dependence will also be greatly reduced by about 15 percentage points.
SGX Iron Ore 62% Futures& Options Open Interest (Aug 27th)
· Futures 85,112,900 tonnes(Increase 1,646,800 tonnes)
· Options 86,558,100 tonnes(Increase 80,000 tonnes)
Steel Key Indicators
· Steelbank construction steels inventory 7.57 million tonnes, down 0.88% w-o-w. HRC inventories 2.77 million tonnes, up 0.3% w-o-w. 