SHANGHAI, May 11 (SMM) – Recently, the ferrous metals fluctuated widely. The China-Australian relationship deteriorated again due to the re-ferment of the concept of "carbon peak and carbon neutrality" during the holiday and the National Development and Reform Commission's indefinite suspension of all activities under the China-Australia Strategic Economic Dialogue mechanism. The news boosted the bullish sentiment of iron ore futures. Ferrous metals reached a large-scale daily limit and set a periodical high price yesterday. The market transaction risk increased simultaneously. The three exchanges all issued relevant announcements to remind the market risk in the evening of the same day, cooling the overheated market. There was a significant correction in ferrous metals in overnight trading. Iron ore futures fluctuated within a narrow range in the morning.
Shanghai Futures Exchange stated that after research and decision, the rebar Rb2110 contract intraday closing positions transaction fee will be adjusted to one ten thousandth of the transaction amount from the transaction on May 12, 2021 (that is, the evening and night trading on May 11). The transaction fee for the hot-rolled coil Hc2110 contract intraday closing positions is adjusted to one ten thousandth of the transaction amount.
Zhengzhou Commodity Exchange issued an announcement that, in accordance with Article 10 of the "Administrative Measures on Risk Control of Futures Trading of Zhengzhou Commodity Exchange" and Article 27 of the "Detailed Rules for Futures Settlement of Zhengzhou Commodity Exchange", the trading margin standard, price limit range and transaction fee standard of the thermal coal contracts are adjusted after research and decision. First, the trading margin standard for thermal coal futures contracts will be adjusted to 12%, and the price limit will be adjusted to 8% from the settlement on May 13, 2021. Among them, the trading margin standard of the 2106, 2107, and 2108 contracts is adjusted to 15%, and the price limit is adjusted to 10%. Second, the trading fee standard for thermal coal contracts will be adjusted to 30 yuan/lot from the night trading on the night of May 11, 2021, and the trading fee standard for intraday closing positions will be adjusted to 30 yuan/lot.
The DCE announced that due to the daily limit of eight iron ore contracts yesterday, according to Article 19 of the "Dalian Commodity Exchange Risk Management Measures", the trading margin level of the above-mentioned contracts will be increased to 15% on May 11, and the limit range is raised to 13%.
In addition, stocks at 35 ports tracked by SMM totalled 122.54 million mt as of May 7, down1.66 million mt from the previous month. Recently, the volume of imported ore arrivals continued to decline, especially in Shandong and Tangshan areas, with a month-on-month decline of 25.5% and 33.9%, which drove the port stocks to continue to decline.
On fundamentals, due to the continuous decline in iron ore arrivals to ports recently, port inventories also fell for two consecutive periods, and structural problems of ore ports still existed, which boosted iron ore prices. SMM believes that iron ore fundamentals have no negative points for the time being. Under the influence of high profits of steel mills and structural shortage of ore varieties, iron ore prices will keep fluctuating at high. Policy risks should be .prevented
Everbright Futures mentioned that domestic demand continued to recover compared with the previous period with rising average daily output of molten iron, and blast furnace operating rates and capacity utilisation continued to increase. Steel mills actively increased production under the stimulus of high profits, and more blast furnaces gradually reached full production. Steel mills had restocking rigid demand after the Labour Day holiday, the port spot transactions were active, and the continued recovery in demand provided greater support for prices.
Nanhua Futures said that steel mills were willing to restock in the near term due to high profits, and the demand for iron ore performed well, supporting high prices of iron ore. Steel mills' finished product shipments remained high, boosting raw materials such as iron ore.
Guotai Junan Futures believed that from the perspective of iron ore supply and demand fundamentals, there was a slight marginal weakening in the total amount since the beginning of the year, but its own contradictions were not prominent. The trend of finished products led iron ore. Recently, due to the tension between China and Australia, the market was worried about the iron ore supply in the future. Iron ore closed at the daily limit yesterday, and the market sentiment was fully vented. Therefore, it is necessary to be alert to the possible fluctuation at high after the continuous sharp rise.
Huatai Futures said that steel mills did not see any slowdown in their production enthusiasm driven by high profits in the near term, which formed a certain degree of support for the raw materials. Combined with the improvement of overseas pandemics and economic recovery, iron ore consumption was still relatively strong. However, the current iron ore prices are at a high level from a medium and long-term view, and the production suppression policy in various regions is becoming more stringent. Once the production suppression policy is implemented, the demand for iron ore will gradually weaken, and iron ore is likely to enter a state of surplus.
