Healthy Fundamentals Supported Iron Ore Prices To Fluctuate Upward In September, But Prices May Fall In October

SHANGHAI, Oct 12(SMM) – In September, ferrous metal markets were lifted by strong fundamentals. In terms of macro news, in early September, regulator issued a document focusing on iron ore market. In addition, the rapid increase in ore prices in August compressed the profits of steel mills. Therefore, market didn’t see an obvious improvement, and price hike momentum was not prominent. Meanwhile, the PBOC once again lowered the deposit reserve ratio, coupled with easing restrictions on real estate loans, market sentiment improved. Fundamentals were strong in September. Pre-holiday replenishment and high daily pig iron production drove up ore prices. With the Mid-Autumn Festival and National Day approaching, and steel mill inventories being insufficient, replenishment demand emerged. In addition, the average pig iron output of steel mills continued to rise in September, reaching the highest level in recent years. Rigid demand and replenishment shored up iron ore prices. However, the pace of overseas shipments remains stable. The arrivals at domestic major ports declined slightly due to the shipping schedule, and it was difficult for port inventory to accumulate. At the beginning of September, imported iron ore prices rose from 900 yuan/mt to 945 yuan/mt. Subsequently, as optimistic market sentiment faded, ore price fluctuated between 930 yuan/mt and 940 yuan/mt in late September.

After entering October, the market’s expectations for the peak season cooled down, but participants were still optimistic about macroeconomic policies and economic data. In terms of fundamentals, iron ore supply may fall. In terms of demand, according to the steel mill maintenance plan tracked by SMM, pig iron output will peak and then decline. At present, steel mills are suffering loss and there were rumors in some areas about stricter environmental-protection production restrictions and newly added blast furnace maintenance. The imbalance between supply and demand is expected to gradually deepen, which may cause ore prices to drop in October.