Iron ore futures generally weakened today, with the most-traded contract I2605 finally settling at 762 yuan/mt, down slightly by 0.2% from the previous trading day. Spot prices were basically flat compared to the previous trading day. Traders showed mediocre enthusiasm in offering, while steel mills had limited inquiries. Overall market trading activity was dull and quiet.
Key data on iron ore inventories at 10 major ports showed total inventory pulled back to 11.674 billion mt, a decrease of 1.05 million mt WoW. Behind this change was a steady rebound in daily average hot metal production, which drove the release of rigid demand and led to signs of destocking at major ports, indicating substantial improvement on the demand side for iron ore and forming relatively solid support for futures prices.
However, as the Chinese New Year holiday approaches, market participants are taking holidays one after another, leading to a noticeable decline in market activity. Moreover, the dual-high pattern of port inventory and in-factory inventory at steel mills continues to exert significant pressure on the upside room for iron ore. The improvement in demand is expected to take some time before being reflected in prices. Therefore, iron ore prices are projected to continue moving sideways in the short term. [SMM Steel]
