Market Commentary
Iron ore futures edged near $180 as investors reassessed the steel outlook after China signalled a shift in emphasis on steel curbs, raising hopes that there will be some form of easing of the aggressive measures that have been put in place. Attempts to curb steel production from last year’s record of 1.05 billion tonnes have so far been unsuccessful, with output from the first half of the year jumping 12%. The China Iron & Steel Association warned at the weekend that more notable reductions in crude steel output along with government-led environmental checks would be needed in the second half. However, the Politburo meeting “seems to point to a fine-tuning of some of the steel production-cut policy and therefore iron ore bounced back,” Tracy Liao, a commodities strategist at Citigroup Inc., said in a Bloomberg TV interview. “We still think the decarbonization mandate is strategically prioritized, therefore we expect more cuts to be mandated for the rest of the year.” Furthermore, a recent piece on the state-owned Xinhua News agency echoed the sentiment, warning against “campaign-style” carbon reduction efforts. The article argued that overly aggressive measures to cut emission could have a severe impact on the China’s economic recovery. “Affected by the notice of rectifying campaign-style carbon reduction efforts, market expects a slowdown in crude steel output cuts, and iron ore demand may rebound in stages,” SinoSteel Futures said in a note.
Futures in Singapore edged near $180 on Tuesday, with Sep trading as high as 179.6 before easing off to around 179.0. Cal22 also traded at 144.0. Spreads were once again wider, with aggressive spread buyers once again looking for offers. Aug/Sep traded 3.3 and 3.35 while Aug/Oct also traded at 6.9. Sep/Oct also traded at 3.6 and Q4/Cal22 traded 26.9 early on but had since widened out to 27.4 as Sep/Cal was legged in at 35.0.
Physical Trades
Platform
GO traded 170,000 mt PBF at Platts Sep 62% index + $3.70/mt for Aug 30- Sep 8 loading.
Vale, Globalore, 70,000 tonnes of 65% Fe Iron Ore Carajas fines, traded at the September average of Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, cfr Qingdao plus a premium of $4.60 per tonne, bill of lading dated July 28.
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https://fisapp.com/wp-content/uploads/2021/08/Iron-Ore-Report-03082021-Eng-Chn.pdf
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