Port Inventory Buildup Resumes as Cargo Pick-up Weakens; Ore Prices Stay Soft with No Demand Inflection in Sight [SMM Iron Ore Daily Review]

Iron ore concentrate prices in the Tangshan area remained relatively stable, with 66% grade iron ore concentrates priced at 940-945 yuan/mt on a dry basis, including tax, Ex-works. Currently, mines and beneficiation plants are mostly producing normally as planned, but the overall capacity utilization rate remains at a relatively low level, and iron ore concentrate resources remain in a relatively tight situation.

HRC prices drifted lower this week, with overall transaction performance falling short of expectations. Additionally, the US Fed's rate hike landed this week, further cooling market sentiment. In terms of supply, rolling line maintenance decreased this week, and overall HRC production edged up slightly. On the demand side, manufacturing is slowly recovering, and overall HRC demand has begun to pick up, though it has not met market expectations. In terms of inventory, this week SMM's survey of HRC social inventory across 86 warehouses nationwide (large sample) stood at 4.6518 million mt, down 10,700 mt WoW, or -0.23% WoW. By region, all regions saw inventory buildup except east China, which destocked. Looking ahead, coke prices are more likely to remain stable next week, while iron ore prices are expected to decline, weakening HRC cost support. However, Baowu's October pricing policy was released, with HRC base prices raised by 200 yuan, and some steel mills received large export orders, easing domestic supply pressure. HRC prices still have upside expectations. In summary, the most-traded HRC contract is expected to trade in the 3,270-3,370 range next week, drifting higher.