[SMM analysis] is the price of loose iron ore expected to soar in August?-Shanghai Metals Market

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[SMM analysis] is the price of loose iron ore expected to soar in August?

Translation 10:16:43AM Aug 01, 2019 Source:SMM
The content below was translated by Tencent automatically for reference.

The MMi62% iron ore price index closed at $122.09 a tonne at the end of July, up $3.30, or 2.8 per cent, from $118.79 at the end of June. The MMi 62% port spot index closed at 902 yuan / ton at the end of July, up 25 yuan / ton, or 2.85%, from the end of June. The probability of volatility in the high range of import mine prices is expected to be greater in August.

In the first half of July, the current prices of the iron ore period broke new highs one after another, causing special concern in the market; the policy side news interfered constantly, in addition to the voice of the China Iron and Steel Association, the national mainstream steel enterprises jointly set up an "import mining group." in addition, there are a series of measures taken by the "Metallurgical Chamber of Commerce" to restrain mining prices, all of which have formed a certain suppression on the iron ore futures market. Then, Tangshan issued "strict control measures for the prevention and control of air pollution in Tangshan in late July." the document requires that from 8: 00 to 20:00 on July 22, the port collection and distribution trucks are prohibited from entering and leaving the port area, and iron and steel, coking and cement enterprises are not allowed to transport vehicles into the factory area. At the same time, from 00: 00 on July 26 to 24:00 on July 28, the city's iron and steel enterprises all stopped production of sintering machine (shaft furnace) equipment and other news that Tangshan environmental protection production restrictions in the last half of the year have become more stringent, further curbing the demand for iron ore.

As of July 26, the daily average of Jingtang and Caofeidian ports followed by SMM both dropped to about 150000 tons (the normal state remained about 300000 tons), and the bad news was superimposed, further suppressing the current iron ore market.

In August, the iron ore supply side is expected to ease as Brazilian and non-mainstream mine supplies rise, but it may be difficult to make a real difference to the tight supply pattern. According to SMM data, the average weekly shipment of iron ore in Australia remained at 13.9 million tons in July, compared with an average of about 14.75 million tons in June; Australian shipments have not yet maintained a sustained increase; Brazil shipped an average of 6.3 million tons per week in July and an average of about 6.2 million tons per week in June, with a late or continuous increase in Brazilian mine supply.

Moreover, according to port inventory data for July, inventories at 35 ports tracked by SMM totaled 106.3 million tons at the end of July, down 380000 tons from the end of June. Although the month-on-month decline narrowed, it was down 34.03 million tons from the same period last year. At the same time, the average daily port volume of iron ore ports fell by 100000 tons at the end of last month, an increase of 150000 tons over the same period last year. The average daily port gap decreased compared with the previous month, mainly due to the tightening of production restrictions in Tangshan area.

In terms of varieties, as of the end of July, the inventory of Qingdao, Rizhao, Jingtang, Caofeidian, Tianjin and Lianyungang six ports MNPJ (Mike, Newman, PB powder, Jinbuba) followed by SMM fell 1.55 million tons from the previous month, a decrease of 14.6 percent; at the same time, Yang Di, mixed and ultra-low-grade mine stocks in the six ports fell 850000 tons from the end of last month, an increase from the previous month. Australia's mainstream resource inventories have maintained a downward trend; total port inventories have risen for only one week after 14 consecutive weeks of decline and have yet to show signs of continued accumulation.

From the demand side, the Tangshan production limit tends to be loosened in August; as far as the opinion draft is concerned, the SMM estimates that the production limit in August is expected to affect pig iron production of 1.3422 million tons and iron ore demand of 2.0025 million tons, 1.8558 million tons and 3.8742 million tons less than in July, respectively. In August, with the gradual recovery of steel production in Tangshan area, the demand for ore is expected to increase, iron ore prices still have a strong support.

In terms of cost, in July, the average price index of MMI62% iron ore floated by sea was US $120.9, and the spot cost of landing was about 890 yuan / ton. At present, the spot price of PB powder port in Qingdao port is about 885 yuan / ton, and the willingness of merchants to stand up to the price is still strong.

However, in view of the high mining prices, the profits of steel mills continue to be compressed, and mining prices continue to rise or be suppressed. According to the SMM data model, according to the calculation of 120 US gold mine in July, the thread profit of steel mill is only about 239yuan / ton, and the hot coil is less than 100yuan / ton. Some steel enterprises say that they are already in a state of loss, and the price of iron ore continues to double its upward pressure. August may be dominated by interval high shock.

 

[SMM analysis] is the price of loose iron ore expected to soar in August?

Translation 10:16:43AM Aug 01, 2019 Source:SMM
The content below was translated by Tencent automatically for reference.

The MMi62% iron ore price index closed at $122.09 a tonne at the end of July, up $3.30, or 2.8 per cent, from $118.79 at the end of June. The MMi 62% port spot index closed at 902 yuan / ton at the end of July, up 25 yuan / ton, or 2.85%, from the end of June. The probability of volatility in the high range of import mine prices is expected to be greater in August.

In the first half of July, the current prices of the iron ore period broke new highs one after another, causing special concern in the market; the policy side news interfered constantly, in addition to the voice of the China Iron and Steel Association, the national mainstream steel enterprises jointly set up an "import mining group." in addition, there are a series of measures taken by the "Metallurgical Chamber of Commerce" to restrain mining prices, all of which have formed a certain suppression on the iron ore futures market. Then, Tangshan issued "strict control measures for the prevention and control of air pollution in Tangshan in late July." the document requires that from 8: 00 to 20:00 on July 22, the port collection and distribution trucks are prohibited from entering and leaving the port area, and iron and steel, coking and cement enterprises are not allowed to transport vehicles into the factory area. At the same time, from 00: 00 on July 26 to 24:00 on July 28, the city's iron and steel enterprises all stopped production of sintering machine (shaft furnace) equipment and other news that Tangshan environmental protection production restrictions in the last half of the year have become more stringent, further curbing the demand for iron ore.

As of July 26, the daily average of Jingtang and Caofeidian ports followed by SMM both dropped to about 150000 tons (the normal state remained about 300000 tons), and the bad news was superimposed, further suppressing the current iron ore market.

In August, the iron ore supply side is expected to ease as Brazilian and non-mainstream mine supplies rise, but it may be difficult to make a real difference to the tight supply pattern. According to SMM data, the average weekly shipment of iron ore in Australia remained at 13.9 million tons in July, compared with an average of about 14.75 million tons in June; Australian shipments have not yet maintained a sustained increase; Brazil shipped an average of 6.3 million tons per week in July and an average of about 6.2 million tons per week in June, with a late or continuous increase in Brazilian mine supply.

Moreover, according to port inventory data for July, inventories at 35 ports tracked by SMM totaled 106.3 million tons at the end of July, down 380000 tons from the end of June. Although the month-on-month decline narrowed, it was down 34.03 million tons from the same period last year. At the same time, the average daily port volume of iron ore ports fell by 100000 tons at the end of last month, an increase of 150000 tons over the same period last year. The average daily port gap decreased compared with the previous month, mainly due to the tightening of production restrictions in Tangshan area.

In terms of varieties, as of the end of July, the inventory of Qingdao, Rizhao, Jingtang, Caofeidian, Tianjin and Lianyungang six ports MNPJ (Mike, Newman, PB powder, Jinbuba) followed by SMM fell 1.55 million tons from the previous month, a decrease of 14.6 percent; at the same time, Yang Di, mixed and ultra-low-grade mine stocks in the six ports fell 850000 tons from the end of last month, an increase from the previous month. Australia's mainstream resource inventories have maintained a downward trend; total port inventories have risen for only one week after 14 consecutive weeks of decline and have yet to show signs of continued accumulation.

From the demand side, the Tangshan production limit tends to be loosened in August; as far as the opinion draft is concerned, the SMM estimates that the production limit in August is expected to affect pig iron production of 1.3422 million tons and iron ore demand of 2.0025 million tons, 1.8558 million tons and 3.8742 million tons less than in July, respectively. In August, with the gradual recovery of steel production in Tangshan area, the demand for ore is expected to increase, iron ore prices still have a strong support.

In terms of cost, in July, the average price index of MMI62% iron ore floated by sea was US $120.9, and the spot cost of landing was about 890 yuan / ton. At present, the spot price of PB powder port in Qingdao port is about 885 yuan / ton, and the willingness of merchants to stand up to the price is still strong.

However, in view of the high mining prices, the profits of steel mills continue to be compressed, and mining prices continue to rise or be suppressed. According to the SMM data model, according to the calculation of 120 US gold mine in July, the thread profit of steel mill is only about 239yuan / ton, and the hot coil is less than 100yuan / ton. Some steel enterprises say that they are already in a state of loss, and the price of iron ore continues to double its upward pressure. August may be dominated by interval high shock.