Port Inventories Slightly Destocked, Port Cargo Pick-up Rebounded; Ore Prices May Be Under Pressure in the Short Term Amid Demand Concerns [SMM Iron Ore Daily Review]

Iron ore futures trended stronger today. The most-traded DCE I2701 contract closed at 727 yuan/mt, up 1.04% from the previous trading day. Spot prices at Qingdao Port rose by an average of 1 yuan/mt. Trader quoting enthusiasm was moderate, steel mills mostly purchased as needed, and overall spot trading activity was lukewarm.

Iron ore port inventories saw slight destocking this week, but the demand side is turning soft. Total iron ore inventory at 35 major ports in China stood at 143.91 million mt, down 1.7 million mt WoW, with overall inventory levels flattening out. Daily average port pick-up volume rose 55,000 mt WoW to 3.145 million mt. Some domestic steel mills scheduled equipment maintenance due to tight coke supply, weakening their purchase willingness for iron ore, and blast furnace hot metal production growth is expected to slow down. In addition, Indonesian steel mills are facing industrial water shortages due to the El Niño phenomenon, and market sources also said a Vietnamese steel mill halted its blast furnace due to a fire. These factors together point to weakening short-term iron ore demand. As a result, short-term iron ore prices are likely to come under pressure. [SMM Steel]