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[SMM Analysis] it is difficult to maintain the rising trend of iron ore with both supply and demand.
Jul 31,2020 16:43CST
translation
Source:SMM
Iron ore futures continue to rise this month, up nearly 14% as of today. However, recently, the increase was mainly contributed by the first ten days of this month, while the trend was quite volatile in the second half of the month. SMM survey data show that the latest blast furnace operating rate continues to rise, while port inventories have accumulated for the sixth consecutive week, weakening the momentum of iron ore prices in the face of a double increase in supply and demand.
The content below was translated by Tencent automatically for reference.

SMM7 March 31: iron ore futures prices continue to rise this month, as of today the main increase of nearly 14%. However, recently, the increase was mainly contributed by the first ten days of this month, while the trend was quite volatile in the second half of the month. SMM survey data show that the latest blast furnace operating rate continues to rise, while port inventories have accumulated for the sixth consecutive week, weakening the momentum of iron ore prices in the face of a double increase in supply and demand.

According to macro news, yesterday's meeting of the political Bureau of the CPC Central Committee indicated that it would speed up the formation of a new development pattern with the domestic great cycle as the main body and the domestic and international double cycles promoting each other. Monetary policy should be more flexible, moderate and accurate. Re-emphasize the need to adhere to housing speculation, promote the stable and healthy development of the real estate market, and develop new infrastructure. It is also pointed out that it is necessary to effectively organize flood control and disaster relief, make overall plans for the safety of rivers in the south and north, and meticulously plan and implement post-disaster recovery and reconstruction. From a macro point of view, the rise of ferrous metals was driven by liquidity easing and the recovery of the real economy in the first half of this year. With the gradual recovery of the economy, the marginal easing of liquidity narrowed, and later iron ore mainly depended on downstream demand.

As for electric furnace factories, according to SMM research, as of July 28, 34 independent electric arc furnace steel mills across the country had an operating rate of 81.27%. It rose 2.72 percent from last week, 3.54 percent higher than the same period last month, and has been up for three consecutive weeks this week. The operating rate of electric arc furnace steel mill has rebounded continuously to restrain the demand for iron ore.

In terms of port inventory, SMM tracked inventory totaling 105.21 million tons, an increase of 2.31 million tons compared with the previous month. Port inventory has accumulated for the sixth consecutive week, and the growth rate continues to expand. Even in the case of structural shortages, the effect of inventory growth on price support is weakening.

SMM believes that iron ore will continue to fluctuate and even have a downward trend next week. However, iron ore is likely to fluctuate at a high level throughout August, and there is even a chance to reach a new high if there is an anomaly in Brazilian supply.

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