Ferrous Market
– China steel mills are planning to invest in south-east countries, equal to 54 million tonnes of steel capacity.
– Ganggu Construction Steel Inventory: production 5.26 million tonnes, down 55,400 tonnes w-o-w. Mills inventory 3.55 million tonnes, down 274,600 tonnes w-o-w. Circulation inventory 7.93 million tonnes, up 731,300 tonnes w-o-w.
– Many steel mills increase steel price in mid-Nov. Zhongtian rebar up 270 yuan in mid-Nov compared to early Nov. Baosteel Dec HRC up 100 yuan compared to Nov HRC.
– MySteel Australia and Brazil iron ore total delivery at 21.38 million tonnes, down 6.02 million tonnes w-o-w. Australia iron ore delivery 15.87 million tonnes, down 2.997 million tonnes w-o-w. Australia delivery to China 12.17 million tonnes, down 3.63 million tonnes w-o-w. Brazil iron ore delivery 5.5 million tonnes, down 3.03 million tonnes w-o-w. Global iron ore delivery 27.81 million tonnes, down 6.05 million tonnes w-o-w
Macro
– U.S. Federal Reserve report indicated if Covid-19 worsening in coming months, major assets will face a downside risk. Major U.S. financial assets were strong past few months since several government stimulations. However commercial house prices start to fall, hedge funds leverage ratio were generally high. In addition, insurance company debts reached the highest since financial crisis in 2008.
SGX Iron Ore 62% Futures& Options Open Interest(Nov 10th)
– Futures 61,683,600 tonnes(increase 1,107,300 tonnes)
– Options 75,857,300 tonnes(increase 964,000 tonnes)
Verdict
– Short-term neutral.