6 February 2018
- We see short-term supply conditions as marginally bullish. Mill re-stocking gained further momentum which, along with lower imports and forward supplies, are positive price developments. However, the expected increase in spot supplies in the short-term are expected to put downward pressure on prices.
- We see short-term demand conditions as bullish. Margins improved which is expected to lift near-term demand for IO. Steel rates declined which along with our lower domestic vs. imported ore arb suggest headwinds for IO prices.
- Steepening of the forward curve as indicated by our cash and carry arb suggests price supportive developments.
- Short-term macroeconomic conditions are marginally bearish. Downstream steel demand is mixed with the latest macro data showing weaker demand in the manufacturing sector. Short-term credit conditions continue to increase which compliments the headwinds created by weakening in currency conditions.