[China Iron Ore Brief] Next week, domestically produced iron ore concentrate prices may have some room to rise.

This week, ferrous metals experienced divergent and volatile movements. At the start of the week, the four major stock indices all closed lower. Coking coal futures showed strong performance, with the most-traded contract 2609 hitting a high of 1,486.5 yuan/mt, while ore and steel futures trended weaker. Subsequently, hit by news about Shaanxi authorities ensuring coal supply for enterprises, coupled with persistently weak steel consumption, supply-demand imbalances gradually built up, leading to a sharp decline in coking coal and coke futures. In the latter half of the week, on the one hand, news of iron ore shipments and tightening market liquidity drove a stronger performance in its futures; on the other hand, the escalation of coking coal supply tightness once again pushed up coking coal, coke, and hot-rolled coil and rebar futures prices. In the spot market, the sixth round of coke price increases was implemented mid-week......

DCE iron ore futures trading was in the doldrums today. The most-traded contract, I2609, eventually closed at 764 yuan/mt, down 0.33% from the previous trading session. Port spot prices were unchanged from the previous day. Traders showed average enthusiasm in quoting; steel mills purchased as needed with few inquiries, and spot trading volume was low as of now.

This week, HRC prices fluctuated downward. The weekly average price edged lower, and overall trading volume declined. Supply side, rolling line maintenance decreased this week, and overall HRC production edged up. Demand side, apparent demand for HRC weakened again this week, as the downstream sector entered the off-season, with high temperatures and rainfall constraining project starts. Speculative demand retreated, end-user wait-and-see sentiment intensified, and actual procurement volumes gradually declined. Inventory side, this week SMM’s nationwide 86-warehouse (large sample) HRC social inventory stood at 4.279 million mt, down 72,900 mt or 1.68% WoW. By region, inventory in the Northeast and South China markets built up WoW, while East China, North China, and Central China markets saw destocking WoW. Inventory destocking provided support to HRC prices. Cost side, the average iron ore price edged lower, and the sixth round of coke price increases was implemented, slightly strengthening cost support for HRC. Looking ahead, costs may continue to increase, but as the off-season effect deepens, the pace of HRC destocking may narrow. In the short term, HRC prices are expected to move sideways. Overall, the most-traded HRC contract is expected to trade in the 3,340-3,410 range next week.