Iron Ore Futures Prices Slumped amid COVID-19 Outbreak, But Pre-holiday Restocking Should Support Iron Ore Prices

SHANGHAI, Apr 26 (SMM) - DCE iron ore prices dived again yesterday, down 10.73% throughout the day, and the most-traded 2209 contract closed at 794.5 yuan/mt. Traders held back cargoes, while steel mills took a wait-and-see stance. SMM data showed that the spot price of PB fines at ports in Shandong lost 20-25 yuan/mt to 920-925 yuan/mt. The transaction prices of ultra-special fines at ports in Shandong were 674-680 yuan/mt, which were 15-20 yuan/mt lower than the previous day. The transaction prices of PB fines in Tangshan area were 920 yuan/mt, which was 20 yuan/mt lower than the previous day's price. The transaction price of super special fines in Tangshan area was 680 yuan/mt.

The price slump was mainly due to COVID-19 outbreak across China and expectations for crude steel output reduction. Although steel mills are struggling to break even, they have no plans to lower output further, hence iron ore demand will be relatively stable. Steel mills’ inventory has been low due to the pandemic, thus there should be a wave of restocking before the Labour Day holiday, which will give certain support to iron ore prices.