4 December 2017
- We see short-term supply conditions as bullish. Mills’ re-stocking efforts gained further momentum which along with tightness in spot and forward supplies are price supportive developments. The only downside we picked up is the expected increase in IO arriving in China in the coming week which is likely to exert downward pressure on prices.
- We see short-term demand as bullish. Profit margins continue to climb amid increasing steel prices. The rebound in margins have been instrumental in incentivising recent re-stocking efforts by mills. While steel rates continue its decline, our domestic vs. imported ore arb and cash and carry arb indicators continue to reflect price positive developments.
- We see short-term macroeconomic conditions as bullish. Downstream steel demand improved with the latest release in manufacturing data. Our currency impact index, let by the strength of the importers’ currency basket, appreciated further which indicates greater purchasing power by end-users. This along with further expansion of short-term lending are likely to provide further tailwinds for prices.