20160201-普氏-restocking,_derivatives_bolster_spot_iron_ore_14页_544kb

SBB STEEL MARKETS DAILY Summary - February 1, 2016

Core Content

The SBB STEEL MARKETS DAILY report from February 1, 2016, provides an overview of the global iron ore, coking coal, and ferrous scrap markets, highlighting price movements, trade dynamics, and market sentiment.

Main Points

Iron Ore Market

• Spot Iron Ore Prices: The $62% Fe Iron Ore Index increased to $43.35/dry mt CFR Qingdao, up 95 cents from Friday.
• Derivatives Support: The front-month March IODEX swap rose to $41.95/dmt CFR North China, indicating market strength.
• Restocking Activity: Mills in northern China were restocking in anticipation of post-Lunar New Year price increases.
• Port Activity: Quayside prices for $61.5% Fe Australian Pilbara Blend fines in Rizhao, China were at Yuan 320/wmt (equivalent to $41.24/dmt).
• Market Outlook: Sellers were holding firm on offers, and liquidity remained muted. Demand for mainstream Australian fines had decreased.
• Production Restart: A steelmaker in Tangshan restarted a blast furnace, indicating potential for increased production if steel prices improve.
• Premium Trends: Atlantic blast furnace pellet premiums rose to $28.50/dmt for February, up $2.50 from January.
• DR Pellet Premiums: Direct Reduction (DR) pellet premiums increased due to higher offers for second-quarter cargoes.
• Price Assessment Basis: Platts uses IODEX 62% Fe prices and Capesize freight rates to determine pellet prices.
• Quality Adjustments: Premiums are adjusted based on Fe content and quality parameters such as silica, alumina, and CCS.
• Steel Market Weakness: Weak steel prices and high premiums relative to underlying fines prices continued to pressure buyers.
• Samarco Impact: The exit of Samarco was expected to tighten the market in the long term, though not immediately.

Coking Coal Market

• Weak Demand Ahead of Lunar New Year: Demand in the Asia-Pacific metallurgical coal market was weak due to the upcoming holiday.
• Price Stability: Premium Low Vol coking coal prices remained unchanged at $74.80/mt FOB Australia and $79.00/mt CFR China.
• Second-Tier Prices: Second-tier material prices fell by $1.50/mt to $75.75/mt CFR China.
• Freight Rates: Lower ex-Pacific freight rates were affecting US export price expectations, particularly for lower-CSR coals.
• US Coal Valuations: US low-vol coking coal under pressure from Australian and Canadian material.
• Swap Assessments: Coking coal swaps for 2017 and Q2-Q4 2016 showed varied movements, with calendar 2017 contracts at $70/mt FOB Australia.

Ferrous Scrap Market

• HMS Prices: HMS prices varied across regions, with HMS CFR Turkey at $174.00-176.00/mt, and HMS FOB Rotterdam at $153.00-157.00/mt.
• Shredded Prices: Shredded prices were also noted, with del Midwest US at $190.00-200.00/lt and del East Coast at $120.00-130.00/lt.
• Market Conditions: Buyers were cautious due to weak steel prices and competition from other materials like scrap, pig iron, and HBI.
• Supplier Flexibility: Some mills were exploring alternative producers to cut costs and better match steel product prices.

Key Information

• Market Trends: Spot iron ore prices and derivatives were bolstering the market, with some mills restocking.
• Supply Constraints: Sellers were holding firm, and there was limited liquidity.
• Production Adjustments: Some mills were restarting production lines to capitalize on potential profit opportunities.
• Premium Adjustments: Premiums for both Atlantic blast furnace pellets and DR pellets were increasing, influenced by new offers and rollover terms.
• Economic Weakness: Weak steel demand and lower PMI in China were seen as risks to the iron ore market.
• Regional Variations: Prices varied by region and quality, with Australian fines and Brazilian pellets being notable.
• Freight Rates: Lower freight rates were affecting the netback calculations and influencing price expectations.

Summary Table

Additional Notes

• Methodology: Prices and assessments are based on market data, with adjustments for quality and freight.
• Liquidity: Muted liquidity and firm seller offers were noted in the iron ore market.
• Forecast: Expectations of increased volumes at major Chinese ports by end-February may affect port stock prices.
• Market Sentiment: Buyers were cautious due to weak steel prices and economic concerns.

Disclaimer

• Use Restrictions: Data is for internal use only unless otherwise authorized.
• Liability: No warranties or guarantees are provided; use at your own risk.
• Source: Prices and assessments are based on actual market participants and are subject to change.