[SMM Iron Ore] Softer premiums and freight return imported iron ore margins to profit

The average imported iron ore margin recovered from -0.73 yuan/mt to 1.36 yuan/mt this period, returning to positive territory. Seaborne premiums for some brands fell and freight rates eased, lowering import costs, while port spot prices rose 1 yuan/mt on average.

Prices this week were supported by pre-holiday restocking, higher freight rates and expectations of reduced Brazilian supply, with the weekly average up about 2 yuan/mt. On fundamentals, overseas shipments are expected to edge higher, while arrivals are already at elevated levels and may ease slightly, though they remain high overall. On demand, blast furnace maintenance increased this week, with some programmes due to start between late September and early October. Hot metal output is expected to fall further next week and the decline may steepen from October. Combined with the end of pre-holiday restocking, iron ore demand faces a marked contraction, and bearish fundamentals continue to weigh on prices.

Risk aversion prompted some funds to step back today, however, and price swings have narrowed. Iron ore prices are likely to trade in a limited range next week, extending the current sideways pattern, with imported margins hovering around breakeven.