Iron Ore and A-share Market Weekly Report and Global Capital Market Weekly Report 20240205
Overall
• The two major upward supports for mineral prices this week — steel companies' inventory replenishment and policy incentives were all exhausted before the holiday season. At the same time, steel companies increased maintenance before the holiday season due to poor profit levels, weakening expectations for marginal improvements in ore fundamentals. Steel companies have limited efforts to resume production after the holiday season. Overall, the average daily output of iron and water in February is difficult to return to more than 2.3 million tons. As a result, it is difficult to effectively store post-holiday ore. The port sector expects a significant increase in inventory pressure after the holiday season. $SSIF DCE Iron Ore Futures Index ETF(03047.HK$
On the supply side
• Global shipments of 29.69 million tons, an increase of 3.4 million tons, of which Australia shipped 17.203 million tons, an increase of 2.115 million tons, and Brazil shipped 5.726 million tons, a decrease of 716,000 tons over the previous month.
• Thanks to the recovery in mainstream mine delivery levels and non-mainstream mines maintaining high shipping levels at high mineral prices, overall global ore shipments have further rebounded. Looking at the later stages, there is still room for the FMG shipment level to pick up. Combined with the weather conditions in Australia and Pakistan over the next week, there is limited disruption to shipments, and ore shipments are expected to pick up steadily. The amount of imported domestic ore arriving in Hong Kong has been declining for two consecutive weeks. Currently, the amount arriving in Hong Kong has dropped to normal levels during the same period.
• The two major upward supports for mineral prices this week — steel companies' inventory replenishment and policy incentives were all exhausted before the holiday season. At the same time, steel companies increased maintenance before the holiday season due to poor profit levels, weakening expectations for marginal improvements in ore fundamentals. Steel companies have limited efforts to resume production after the holiday season. Overall, the average daily output of iron and water in February is difficult to return to more than 2.3 million tons. As a result, it is difficult to effectively store post-holiday ore. The port sector expects a significant increase in inventory pressure after the holiday season. $SSIF DCE Iron Ore Futures Index ETF(03047.HK$
On the supply side
• Global shipments of 29.69 million tons, an increase of 3.4 million tons, of which Australia shipped 17.203 million tons, an increase of 2.115 million tons, and Brazil shipped 5.726 million tons, a decrease of 716,000 tons over the previous month.
• Thanks to the recovery in mainstream mine delivery levels and non-mainstream mines maintaining high shipping levels at high mineral prices, overall global ore shipments have further rebounded. Looking at the later stages, there is still room for the FMG shipment level to pick up. Combined with the weather conditions in Australia and Pakistan over the next week, there is limited disruption to shipments, and ore shipments are expected to pick up steadily. The amount of imported domestic ore arriving in Hong Kong has been declining for two consecutive weeks. Currently, the amount arriving in Hong Kong has dropped to normal levels during the same period.
Demand side
• 247 steel mills had a blast furnace operating rate of 76.5%, a decrease of 0.3%; the utilization rate of blast furnace iron production capacity was 83.57%, up 0.07% from the previous month; the profit rate of steel mills was 26%, down 0.4% from the previous month; and the average daily iron and water production was 2,235,000 tons, an increase of 20,000 tons.
• Although iron and water production continued to increase this week, the increase was limited. Combined with steel mill maintenance at the end of January, there was a marked increase compared to expectations, so we lowered our expectations for steel companies to resume production in the later stages. Moreover, judging from the profit situation of steel companies, the overall profit situation is still poor, causing uncertainty for steel companies to resume production after the holiday season.
In terms of inventory
• The total stocks of iron ore imported from steel mills across the country were 108.23 million tons, an increase of 3 million tons; the current daily consumption of imported ore from the sample steel mills is 2.72 million tons, flat from month to month. Inventory consumption is 39.68, an increase of 1.1 days over the previous month.
This week's A-share weekly report:
1. ETFs and Chinese investors from the North are still the main marginal forces in the market, but the margins have slowed down. Corresponsibly, there has been a return in both the northbound allocation/trading market.
2. Liangrong has significantly net sold A-shares, and Liangfinance's activity has clearly fallen back to the second low since 2023.
3. The overall buying consensus of all types of investors in the market fell back to an all-time low, while the selling consensus rose to an all-time high. This means that in terms of stages, the market still lacks upward synergy, and the direction of net inflows from Chinese investors and ETFs (mainly related to the Shanghai and Shenzhen 300) is still performing relatively well. $300ETF(510300.SH$
Global Capital Markets Weekly Report:
Six of the seven major technology network constituent stocks “Magnificent 7” have announced fourth-quarter results. With the exception of Tesla, all stocks have exceeded sales expectations generally anticipated by the market. The excellent performance of “Mag 7” continues to this day, with the group's year-to-date return of 8% compared to 3% for the S&P 493 index.
Investors often ask us if the group's 30-fold price-earnings ratio is sustainable given that the rest of the index's trading rate is 18x. The premium valuation reflects investors' expectations that “Mag 7” will have a 3-year compound annual growth rate of 12%, while the S&P 493 index will have a compound annual growth rate of 3%.
As the internet bubble shows, continued excellent performance requires stocks to exceed the high standards set by consensus. Despite high growth expectations, if the expectations are met and the valuation remains the same, the group will outperform the market. $NVIDIA(NVDA.US$
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