Fundamental support weakens, imported iron ore prices are expected to fluctuate downward this week

The third round of coke price hike had not been implemented, and steel mills' losses did not worsen, which diminished their willingness to cut blast furnace production further. Iron ore purchases increased. According to SMM weekly maintenance data, the blast furnace operating rate and daily pig iron output didn’t change much. Although global shipments and port arrivals added, port inventories still remained low and there was little pressure on ore prices. Fundamentals provided strong support for ore prices. Besides, the easing intensity of Hangzhou's property market policy exceeded market expectations. Coupled with improving apparent demand for rebar, market confidence was boosted, driving iron ore futures prices to fluctuate strongly. Spot prices followed the rise but the increase was not as much as that of futures, and the overall price moved up. The spot prices of PB fines at ports in Shandong gained 5-10 yuan/mt on a weekly basis.

SMM shipping data showed that overseas shipments soared earlier, which may lead to a slight increase in arrivals at ports this week. Port inventories may accumulate slightly. However, the current pig iron output remained high, and the demand for iron ore was acceptable, which provided support for prices. Coke suppliers made discounts, but rising ore prices kept compressing the steel mill’s profits. Since the peak-season effect on terminal demand faded, it is difficult for finished steel prices to improve, which may deepen the losses of steel mills, and there is still a risk of a decline in pig iron output. As the heating season approached, some regions successively issued environment-protection production restriction policies. It is expected that regional production restrictions will increase this week. In addition, the Palestinian-Israeli conflict continued, which impacted commodity prices deeply. Under the influence of multiple factors, the price trend of iron ore is expected to remain relatively volatile this week.