9 October 2017
- We see short-term supply as neutral. Mills’ re-stocking efforts remained weak which is a price negative development. We continue to see more IO imports arriving into China which is likely to put pressure on prices. Both spot and forward supplies of IO however shows some slowdown which may offer some support to prices.
- Short-term demand is bearish. While profit margins still remain positive, there is sign of weakening rebar margins. As a result, steel rates continue to decline. Our domestic vs. imported ore arb and cash and carry arb continues to indicate the lack of incentive to buy or/ and store seaborne IO.
- The short-term macroeconomic conditions are marginally bearish. Latest manufacturing data continues reflect resilience in downstream demand as our re/de-stocking cycle indicator strengthened. Our construction demand index however looks to weaken further. Our currency impact index worsened which is likely to put pressure on IO prices. Short-term credit liquidity shows some support although there are signs of tighter credit conditions from week#42.
- For a more detailed analysis contact the team.