Tug-of-War Between Longs and Shorts Continues, Iron Ore Fluctuates Downward [SMM Commentary]

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Today, DCE iron ore futures moved downwards after a higher opening, fluctuating downward throughout the day. The most-traded I2505 contract finally closed at 801, down 0.99% for the day. On the first trading day after the holiday, traders actively offered cargoes. Steel mills made numerous inquiries but remained cautious in their purchases. Today's market transactions were sluggish. In Shandong, the mainstream transaction prices of PB fines were 790-795 yuan/mt, basically stable compared to pre-holiday levels; in Tangshan, PB fines traded at around 815 yuan/mt, also basically stable compared to pre-holiday levels. According to the SMM survey, as of February 5, the operating rate of blast furnaces at 242 steel mills surveyed by SMM was 85.97%, up 0.37 percentage points from pre-holiday levels. The daily pig iron production of the sample steel mills was 2.3791 million mt, up 15,000 mt WoW. Pig iron production increased slightly. Coupled with post-holiday restocking demand from steel mills, the overall demand for iron ore remained robust, providing some support for ore prices. However, during the holiday, the US announced a 10% tariff increase on Chinese goods, which disrupted futures prices. Additionally, downstream real demand is still in the verification phase, and market sentiment appeared slightly pessimistic. In the short term, the tug-of-war between longs and shorts is expected to continue, and ore prices may fluctuate rangebound.