Post-Holiday Expectations for Hot Metal Production Improve, Iron Ore Futures Rise Slightly [SMM Brief Commentary]

DCE iron ore futures moved higher today, with the most-traded contract I2605 finally closing at 753.5 yuan/mt, up 0.67% from the previous trading session. The spot price was basically flat from the previous trading day. Traders showed average enthusiasm in offering quotes, while steel mills’ procurement was mainly driven by rigid demand, and most adopted a wait-and-see stance. Overall, the spot trading atmosphere was somewhat average.
The SMM survey showed that this week, the impact of blast furnace maintenance on hot metal production was 1.8088 million mt, an increase of 61,600 mt WoW from last week, while next week is expected to decrease by 88,100 mt WoW from this week. At present, hot metal production was somewhat constrained by environmental protection policy restrictions. However, as post-holiday work resumption progresses, hot metal production is expected to see a relatively notable rebound. In addition, steel mills’ iron ore inventory was significantly depleted during the Chinese New Year and is currently at a relatively low level; a window for restocking is expected to emerge subsequently, thereby driving an improvement on the demand side. However, considering that port inventory remains at a relatively high level and port pick-up volume has not shown a clear improvement, iron ore prices are unlikely to break through the significant upside pressure in the short term and are expected to maintain rangebound fluctuations.