[SMM analysis] Iron ore rose nearly 10 per cent for three days in a row. Strong supply and demand prices are strongly supported by strong support.

SMM5 18: spring River tide with Haiping, iron ore three days of tide. Although the recent black system overall rise is gratifying, but like iron ore these three days of "carnival" pull up, is also rare.

Based on the closing price of 644.5 yuan per ton on Tuesday, May 14, the iron ore mine rose a total of 62.5 yuan per ton from 15 to 17 May (707 yuan per ton during the day of May 17), an increase of 9.7 percent. Iron ore prices soared to 715.5 yuan per ton on the 17th, the highest level since March 2017. The spot market is also "not to be outdone". PB powder in Shandong and Tangshan areas, which SMM tracks, sold 705 to 710 yuan per ton on Friday, up 30 to 35 yuan per ton from last week.

According to the Wall Street Journal, on Friday, Vale (Vale), the world's largest iron ore producer, warned of another dam break at one of its mines, the Wall Street Journal reported. Since then, iron ore prices have risen above $100 a tonne for the first time in five years. The Brazilian miner said a dam at its Gongo Soco mine containing tailings or waste was in danger of breaking. The warning is another sign of concern about the stability of tailings storage facilities in Brazil.

In response to the official response on the same day, Vale said that after it found signs of loosening of the slope of the Gongo Soco mine, it had immediately reported to the relevant authorities and taken the necessary measures to inform the public of the mine and the South Superior dam 1.5 km from the mouth of the mine. At present, there is no professional and technical data indicating that the final collapse of the slope in Gongo Soco mining area may trigger the dam break event of South Upper tailings dam, and the Gongo Soco mine was shut down in 2016. Residents near the dam were evacuated on February 8.

Iron ore port stocks also continue to decline, according to SMM research, 35 ports iron ore stocks as of May 17, 123.67 million tons, down 830000 tons from 124.5 million tons last week, down 21.13 million tons from the same period last year; Port stocks have fallen for the sixth week in a row. ("for more data, please click [SMM Iron Mine Weekly Review] the iron ore period is soaring and port stocks continue to decline.)

On the demand side, according to the National Bureau of Statistics, in April 2019, the production of crude steel, pig iron and steel in industrial enterprises above the national scale accelerated, and the average daily output of steel reached a new high. In April 2019, the national crude steel output was 85.03 million tons (above, the same below), an increase of 12.7 per cent over the same period last year and 5.9 per cent from the previous month. On this basis, it is estimated that the average daily output of crude steel in April was 2.834 million tons, an increase of 243000 tons per day, or 9.4 per cent, compared with the previous month. From January to April, crude steel output was 314.96 million tons, an increase of 10.1 per cent over the same period last year. In April, the national pig iron output was 69.83 million tons, up 10.1 percent from the same period last year and 5.6 percent from the previous month. On this basis, it is estimated that the average daily output of pig iron in April was 2.328 million tons, an increase of 194000 tons per day, or 9.1 per cent, compared with the previous month. From January to April, the output of pig iron was 262.65 million tons, an increase of 9.6 per cent over the same period last year. This shows that steel mills demand for iron ore has increased unabated.

Generally speaking, SMM believes that the strong supply and demand of iron ore fundamentals in the near future will continue to provide strong support to the iron ore market. However, taking into account the iron ore period prices pull up faster, steel mills for the price digestion rate has slowed, wait-and-see mood is strong, next week or high digestion. Moreover, after the crude steel production reaches a new high, the pressure on the material supply side will be gradually released, and the price may be suppressed at a later stage.