Iron Ore and A-share Market Weekly Report and Global Capital Market Weekly Report
Overall
• The number of arrivals in the current period increased month-on-month, and iron ore ports began to accumulate stocks. Currently, iron and water production continues to decline, and the profit margin of steel mills has dropped sharply; as steel mill losses expand, the blast furnace maintenance process may be accelerated.
• Actual demand for steel is difficult to boost, but spot stocks of low to medium iron ore are low, making it difficult to support a sharp correction in mineral prices. At the macro level, the US dollar index is strong, and commodities are under collective pressure. $SSIF DCE Iron Ore Futures Index ETF(03047.HK$
On the supply side
• Global shipments of 309.54 million tons, up 6.9% from last week, of which Australia shipped 18.4.65 million tons, down 0.19% from the previous week, Brazil shipped 7.147 million tons, up 37% from the previous week, and 5.342 million tons from non-mainstream shipments, up 2.04% from the previous week.
• Total global shipments have increased substantially; mainstream mine shipments have picked up. Platts prices are too high, leading to an increase in shipments from non-mainstream regions; domestic mines are basically flat month-on-month. Sea drift inventory gradually arrived at the port, and the port entered a storage cycle.
Demand side
• The operating rate of blast furnaces in 247 steel mills was 82.3%, up 0.12% from last week, up 0.24% from last year; ironmaking capacity utilization rate was 90.6%, down 0.14% from month to month, up 2.60% year on year; steel mill profit ratio was 19.05%, down 5.19% month on month, down 21.41% year on year; average daily iron and water production was 2,424,400 tons, down 14,000 tons month on month.
• Iron and water production continues to decline, and the profit margin of steel mills has declined sharply; steel mills maintain low inventory operations, and Hong Kong may continue to decline.
In terms of inventory
• The total stocks of imported iron ore in 47 ports across the country were 117.551 million tons, an increase of 22.791 million tons over the previous month. The average daily drain volume of 47 ports was 3.242,500 tons, a decrease of 119,400 tons over the previous month.
Weekly A-share report for this week:
The inclusion of special treasury bonds in the deficit has two major benefits for the market: First, the expected growth rate of the economy. Early policies have had short-term effects on the market. The core is an improvement in liquidity and risk appetite. There has been no substantial improvement in molecular expectations, and there has been no fundamental change in market confidence. Special treasury bonds, in the fourth quarter, 1 trillion dollars, are due ahead of schedule. The 2024 GDP forecast is expected to rise to 5%. Second, special treasury bonds were included in the deficit, breaking through 3% in line with the trend, freeing the mind. To deal with the scarring effects of the epidemic, we still need finance, and the central government must first increase leverage. We expect more leverage from the central government in the future. China is on its way to expand its tables.
Focus on the next few weeks:
1. The five-year financial work conference focuses on debt resolution plans and volume. It is likely that trade-in and support from key regions will be seen. Once implemented, it will further ease concerns on the molecular side.
2. 11.3 Federal Reserve interest rate meeting. Whether APEC leaders meet in mid-November is the key. It is one of the catalysts for improving risk appetite and liquidity.
3. US debt recently went from 4.8% to 5.0%, reflecting more risk aversion. We think the net economic fundamentals have increased by around 4.5% (see the economic situation on 04-07). Follow-up developments focus on geopolitical conflicts.
4. Direction: ️ The direction of recovering economic expectations and turning debt into debt. You can consider key directions such as oil and gas, banking, and urban investment. ️ Technology is the main line in the medium term, and the core revolves around the layout of “Huawei” systems, data elements, robots, etc. $YANKUANG ENERGY(01171.HK$
Global Capital Markets Weekly Report:
1) The Bank of Japan announced an unplanned bond operation on Tuesday aimed at slowing the upward trend in Japanese government bond (JGB) yields, which once hit a ten-year high. The Bank of Japan proposed to buy 300 billion yen ($2 billion) of 5 to 10 year bonds and 100 billion yen of 10 to 25 year bonds starting Wednesday.
2) Europe's initial PMI for October was lower than expected. Among them, the manufacturing sector was 43 (lower than 43.4 in September, lower than the 43.7 Wall Street forecast) and the service sector was 47.8 (lower than 48.7 in September, lower than the 48.6 Wall Street forecast). The region's economy is declining at an accelerated pace, with private sector output falling at the fastest rate in more than a decade (with the exception of the COVID-19 pandemic).
3) Senior administration officials said the Biden administration is concerned that Israel lacks attainable military targets in Gaza and that the IDF is not ready to launch a ground invasion with a workable plan.
4) Despite Washington's attempt to avoid a broader regional war, the US has increased its rhetoric against Iran, saying it will hold Tehran responsible for drone and rocket attacks against the US military by its agents in the Middle East.
5) For the first time, the International Energy Agency predicts that global oil demand will peak in ten years as demand for electric vehicles grows and the Chinese economy cools down. The agency also lowered its gas consumption forecast for the fourth year in a row, according to its annual World Energy Outlook. $XPENG-W(09868.HK$
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3047 is a team specializing in the research of commodities and smart beta. We like to exchange investment strategies.
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