Cum Clave analysis N.06 preview.
Impossible not to talk about it. China is the largest consumer of a range of global raw materials, fuels and foods. The country, the largest importer of crude oil, also accounts for about half of global imports of copper and iron ore.
Chinese copper smelters will cut production by more than 15% in February since last month due to the virus, according to the China Nonferrous Metals Industry Association.
In this scenario, the American and European markets do not exist in comparison. The USA continues in this case not to comment on the scenario that lies ahead. The media continue to arouse information terror.
We believe it is important to maintain relationships and negotiate prices on the market by not abandoning the customer / supplier.
They summarize in some points:
1) Important accumulation of steel in steel warehouses.
2) Steel mills do not deliver due to transport restrictions.
3) Exporters are unable to transport cargo from steel mills to export ports
4) Reduction of cuts.
5) Steel producers will reduce production rates
6) The construction sites and buildings are completely stopped
We reiterate our thoughts: if the international scenario does not change within the first quarter, then there will indeed be serious consequences. But until then, we are still in the normal working phase.
The procurement of materials is in a delicate phase, it is true that the metals have undergone a correction but let’s not forget the speculative technical and financial aspect.
Steel & Iron ore
There are doubts about supply from China, as for example there are risks for Brazilian production. In Brazil there is severe bad weather which prevents the extraction of the iron ore.
We report that Brazil shipped 26.73 million tons of iron ore in January, down 19.33% year on year. Vale lowered his sales guide for the March quarter to 68-73 million tons, from 70-75 million tons,
Steel mills increase the purchase of raw materials before the Lunar New Year holidays as blast furnaces continue to operate during this period and factories prepare for consumer demand in the spring.
We do not see any serious price situations now. The trend suffered short-term bearish shock. In the coming weeks, the most accepted hypothesis is a sideways trend, if not a rise in prices.
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