Ferrous Market
– Tangshan 10 sample steel mills pig iron before tax 3117 yuan/tonne, billet cost 3956 yuan/tonne, down 1 yuan/tonne w-o-w. Gross profit -106 yuan/tonne, down 9 yuan/tonne.
– Tangshan billet lock price at 3850 yuan from Feb 2 – 17th(16 days), a 7 year high price during Chinese New Year. 3300 yuan(22 days) in year 2020. 3430 yuan(17 days) in year 2019. 3610 yuan in year 2018(15 days).
– MySteel Rebar Inventory: Rebar production 3.22 million tonnes, down 3.51% w-o-w.Mills inventory 3.38 million tonnes, up 10.52% w-o-w. Circulation inventory 7.32 million tonnes, up 24.85% w-o-w.
– Vale reached compromise with Minas Gerais government on the previous 7 trillion U.S. dollars penalty on Brumadinho dam collapse.
– Vale’s iron ore fines production¹ totalled 300.4 Mt in 2020, in line with 2019. In 2020, the start-up of the new iron ore assets, Vale remains confident to achieve 400 Mtpy capacity by the end of 2022. Vale ended 2020 with 322 Mt of production capacity and expects to achieve 350 Mt capacity by the end of 2021.
Macro
– China Shijiazhuang(Heibei, previous pandemic spread area) full recovered production in manufacturing industry.
– U.S. federal governor indicated inflation rate will reach 1.5 – 1.75% area by the end of year 2021. Euro zone core inflation rate reach 13.4%, a five-year high.
SGX Iron Ore 62% Futures& Options Open Interest(Feb 3rd)
– Futures 73,634,500 tonnes(increase 1,230,700 tonnes)
– Options 43,997,500 tonnes(decrease 35,000 tonnes)
Verdict
– Short-term neutral.
