Ferrous Market
– Ganggu: Construction steel production 5.73 million tonnes, up 0.17% w-o-w. Mills inventory 5.23 million tonnes, up 0.87% w-o-w. Circulation 11.33 million tonnes, up 0.47% w-o-w.
– MySteel Rebar Inventory: Rebar production 3.85 million tonnes, down 0.4% w-o-w. Mills inventory 3.67 million tonnes, up 1.16% w-o-w. Circulation inventory 8.67 million tonnes, up 0.96% w-o-w.
– DCE iron ore September contract is resisted by delivery value since Yandi has sufficient inventories on ports and all physical traded light during mid of the week. As a result, back month DCE is also limited since overstretch will create some risk-free arbitrage opportunities by buying physical and selling back month contract. SGX iron ore start to become a bit disconnected with DCE this week. But be aware of the risk approaching end of September.
SGX Iron Ore 62% Futures& Options Open Interest(Aug 19th)
– Futures 82,069,700 tonnes(increase 837,800 tonnes)
– Options 118,681,900 tonnes(increase 1,020,000 tonnes)
Verdict
– Short-term neutral to bearish.