Iron Ore and A Shares Market Weekly Report and Global Capital Market Weekly Report
Overall
• Iron and water fell slightly month-on-month, and the profit margin of steel mills declined. Low maintenance volume suggests that iron water will remain high. As the 11th holiday season approaches, steel mills have been replenished, the number of shugang has increased, and sales have rebounded.
• Hong Kong was recovering at the same time as arriving at the port, and port inventory accumulated slightly. Subsequently, as iron and water peaked and sea freight arrived at the port one after another, the port was still under pressure to accumulate storage. $SSIF DCE Iron Ore Futures Index ETF (03047.HK)$
On the supply side
• Total global iron ore shipments last week were 30.13 million tons, a weekly decrease of 3.48 million tons. Australia, Brazil and non-mainstream shipments all declined from week to week; total inbound shipments from 45 ports were 27.03 million tons, up 36.6% from the previous week.
• Total global shipments declined; mainstream mine shipments fluctuated normally. Platts prices are high, leading to an increase in shipments from non-mainstream regions; domestic mining rebounded month-on-month. High seas drift down to the port, causing the port's inventory to be low.
Demand side
• The operating rate of blast furnaces in 247 steel mills was 84.1%, down 0.35 percentage points from the previous week; the utilization rate of blast furnace ironmaking capacity was 92.7%, down 0.1 percentage points from the previous month; the average daily iron and water production was 2.478,400 tons, down 0.40,000 tons from the previous week.
• Iron and water production declined slightly month-on-month, and the profit margin of steel mills declined; as the 11th holiday season approached, steel mills were replenished, and port shugang increased, and 20% of transactions rebounded.
In terms of inventory
• Imported iron ore stocks in 45 ports across the country were 118.66 million tons, a decrease of 20,000 tons over the previous month. This week's inventory continues the inventory removal trend of the previous two periods. Currently, the absolute value of inventory is at a new low during the year and the lowest level in the same period in the past three years.
This week's A-share weekly report:
Recently, overall market performance is still weak, and the core is still building investor confidence. Most macro data improved in August, and signs of marginal economic stabilization continued to increase.
1) Industrial value added in August was 4.5% year-on-year, higher than market expectations.
2) Consumption of commodities has rebounded steadily.
3) Infrastructure investment, manufacturing investment, and other investments have all improved to varying degrees.
4) The addition of social finance in August was significantly higher than market expectations.
5) The domestic PPI growth rate and core CPI growth rate continued to rise steadily.
Capital market care measures have been intensified. Recently, the pace of financing in the A-share market has slowed down, and industrial capital outflows have also improved markedly. Guiding insurance capital to increase equity allocation and reducing the financing guarantee ratio from 100% to 80% is expected to further boost market liquidity.
Looking forward to the golden fall of October. As positive signals such as accelerated implementation of policy maintenance, steady recovery in fundamentals and profits, and gradual improvement in microcapital supply and demand, the subsequent market is expected to gradually recover. The bottom area focuses on building investor confidence.
In terms of configuration, focus on three major directions:
1) The “Sentiment Research Framework in 118 Industry Segments” suggests a marginal improvement in the boom while benefiting from the upstream cycle driven by policy easing, etc.;
2) Continue to be strategically optimistic about semiconductors that resonate in the three major cycles and are expected to reverse at the bottom;
3) Continue to focus on low-volatility dividend assets in the medium to long term. $StarPower Semiconductor (603290.SH)$
Global Capital Markets Weekly Report:
Last week, the ECB raised interest rates by 25 basis points and lowered its recent growth forecast, although the inflation forecast still showed inflation slightly above 2% in 2025. In China, economic activity appears to have bottomed out in August. Credit growth, intellectual property, and retail sales continued to accelerate, and CPI is no longer in a deflationary range.
Oil prices surged to a 10-month high of $95/barrel on Friday and decoupled from other commodities in the summer after Saudi Arabia and Russia extended unilateral production cuts to December. There is a 45% chance that the price of Brent crude oil will remain above $90/bbl until January 2024 in the options market, while the end-of-end risk of oil being repriced is even higher. Our basic opinion is that OPEC+ is unlikely to keep the price above $100 per barrel, but they think recent developments present a short-term bullish risk for their predictions.
Continued increases in oil prices are likely to increase inflationary pressure at the end of the year, which could worsen the global growth/inflation mix. Short-term break-even inflation has risen by 20 basis points over the past three weeks, and the positive correlation between the S&P 500 and Brent crude has weakened since June. A further rise in oil prices, if it puts upward pressure on bond yields, could hinder risk appetite — optimism about global growth is already high, and it is unlikely that it will pick up further.
This summer, energy-related assets generally lagged behind oil in beta values. In the first phase of the rise, energy stocks and credit spreads in the US and the EU performed the least well, while energy forex (exporters and importers) performed well. In the second phase of the rebound, we saw a reversal, with US and EU energy stocks outperforming short-term break-even by a large margin. We continue to be optimistic about short- and long-term inflation-protected bonds to hedge against recent inflation risks and long-term stagnation risks, and continue to hold high-allocation energy bonds.
We are neutral in asset allocation, remain selective about cyclical risk, and focus on arbitrage/relative value opportunities. Commodity (and physical asset) allocations may once again provide more diversified returns in multi-asset portfolios as they continue to be decoupled from stocks and bonds. $Exxon Mobil (XOM.US)$
• Iron and water fell slightly month-on-month, and the profit margin of steel mills declined. Low maintenance volume suggests that iron water will remain high. As the 11th holiday season approaches, steel mills have been replenished, the number of shugang has increased, and sales have rebounded.
• Hong Kong was recovering at the same time as arriving at the port, and port inventory accumulated slightly. Subsequently, as iron and water peaked and sea freight arrived at the port one after another, the port was still under pressure to accumulate storage. $SSIF DCE Iron Ore Futures Index ETF (03047.HK)$
On the supply side
• Total global iron ore shipments last week were 30.13 million tons, a weekly decrease of 3.48 million tons. Australia, Brazil and non-mainstream shipments all declined from week to week; total inbound shipments from 45 ports were 27.03 million tons, up 36.6% from the previous week.
• Total global shipments declined; mainstream mine shipments fluctuated normally. Platts prices are high, leading to an increase in shipments from non-mainstream regions; domestic mining rebounded month-on-month. High seas drift down to the port, causing the port's inventory to be low.
Demand side
• The operating rate of blast furnaces in 247 steel mills was 84.1%, down 0.35 percentage points from the previous week; the utilization rate of blast furnace ironmaking capacity was 92.7%, down 0.1 percentage points from the previous month; the average daily iron and water production was 2.478,400 tons, down 0.40,000 tons from the previous week.
• Iron and water production declined slightly month-on-month, and the profit margin of steel mills declined; as the 11th holiday season approached, steel mills were replenished, and port shugang increased, and 20% of transactions rebounded.
In terms of inventory
• Imported iron ore stocks in 45 ports across the country were 118.66 million tons, a decrease of 20,000 tons over the previous month. This week's inventory continues the inventory removal trend of the previous two periods. Currently, the absolute value of inventory is at a new low during the year and the lowest level in the same period in the past three years.
This week's A-share weekly report:
Recently, overall market performance is still weak, and the core is still building investor confidence. Most macro data improved in August, and signs of marginal economic stabilization continued to increase.
1) Industrial value added in August was 4.5% year-on-year, higher than market expectations.
2) Consumption of commodities has rebounded steadily.
3) Infrastructure investment, manufacturing investment, and other investments have all improved to varying degrees.
4) The addition of social finance in August was significantly higher than market expectations.
5) The domestic PPI growth rate and core CPI growth rate continued to rise steadily.
Capital market care measures have been intensified. Recently, the pace of financing in the A-share market has slowed down, and industrial capital outflows have also improved markedly. Guiding insurance capital to increase equity allocation and reducing the financing guarantee ratio from 100% to 80% is expected to further boost market liquidity.
Looking forward to the golden fall of October. As positive signals such as accelerated implementation of policy maintenance, steady recovery in fundamentals and profits, and gradual improvement in microcapital supply and demand, the subsequent market is expected to gradually recover. The bottom area focuses on building investor confidence.
In terms of configuration, focus on three major directions:
1) The “Sentiment Research Framework in 118 Industry Segments” suggests a marginal improvement in the boom while benefiting from the upstream cycle driven by policy easing, etc.;
2) Continue to be strategically optimistic about semiconductors that resonate in the three major cycles and are expected to reverse at the bottom;
3) Continue to focus on low-volatility dividend assets in the medium to long term. $StarPower Semiconductor (603290.SH)$
Global Capital Markets Weekly Report:
Last week, the ECB raised interest rates by 25 basis points and lowered its recent growth forecast, although the inflation forecast still showed inflation slightly above 2% in 2025. In China, economic activity appears to have bottomed out in August. Credit growth, intellectual property, and retail sales continued to accelerate, and CPI is no longer in a deflationary range.
Oil prices surged to a 10-month high of $95/barrel on Friday and decoupled from other commodities in the summer after Saudi Arabia and Russia extended unilateral production cuts to December. There is a 45% chance that the price of Brent crude oil will remain above $90/bbl until January 2024 in the options market, while the end-of-end risk of oil being repriced is even higher. Our basic opinion is that OPEC+ is unlikely to keep the price above $100 per barrel, but they think recent developments present a short-term bullish risk for their predictions.
Continued increases in oil prices are likely to increase inflationary pressure at the end of the year, which could worsen the global growth/inflation mix. Short-term break-even inflation has risen by 20 basis points over the past three weeks, and the positive correlation between the S&P 500 and Brent crude has weakened since June. A further rise in oil prices, if it puts upward pressure on bond yields, could hinder risk appetite — optimism about global growth is already high, and it is unlikely that it will pick up further.
This summer, energy-related assets generally lagged behind oil in beta values. In the first phase of the rise, energy stocks and credit spreads in the US and the EU performed the least well, while energy forex (exporters and importers) performed well. In the second phase of the rebound, we saw a reversal, with US and EU energy stocks outperforming short-term break-even by a large margin. We continue to be optimistic about short- and long-term inflation-protected bonds to hedge against recent inflation risks and long-term stagnation risks, and continue to hold high-allocation energy bonds.
We are neutral in asset allocation, remain selective about cyclical risk, and focus on arbitrage/relative value opportunities. Commodity (and physical asset) allocations may once again provide more diversified returns in multi-asset portfolios as they continue to be decoupled from stocks and bonds. $Exxon Mobil (XOM.US)$
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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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