6 March 2019
- We assess short-term supply as bearish. We continue to pick up a further increase in forward supply along with higher arrivals of iron ore into China. This is a price negative development. However, this is partly mitigated by the slowdown in growing spot supply. Overall re-stocking efforts are poor as various sintering cuts in China continue to dampen interest and mills continue to de-stock their available material.
- Overall, demand conditions are marginally bearish. Steel margins increased slightly alongside rising steel rates. This should be positive for IO demand. However, this could be partially offset by greater scrap usage as some mills attempt to be more environmentally compliant. Our Domestic vs. Import Arb. continues to suggest a lower preference for seaborne ore in the short-term. With our Cash and Carry Arb also showing some near-term weakness.
- We assess overall short-term macroeconomic conditions as bullish. The latest numbers for downstream manufacturing demand have rebounded which is a price positive development. However, currency conditions have weakened as the strength of the US dollar continues to be picked up by our models. Short-term lending conditions recovered marginally which should support near term demand.