SHANGHAI, Aug 1 (SMM) - Amid the game between expectations and fundamentals, the iron ore prices today fluctuated widely, which once rose by more than 3% in the early trading and finally closed at 787 yuan/mt, up 0.83%.
On the macro front, the Federal Reserve raised interest rates by 75 basis points again, which was in line with market expectations and eased the inflation expectations in the United States. At the same time, favourable policies were introduced for the real estate industry in China. Thus market sentiment picked up, and the market traders expected for a stronger terminal demand in the third quarter. In addition, the recent maintenance of blast furnaces in steel mills has started to weighed on the steel supply and prices. At the same time, the profits of steel mills restored substantially amid the fifth round of coke price cut, and steel mills are expected to resume the production soon. The low raw material inventory of steel mills also increase the expectation of the restocking, which also provided a support for iron ore prices.
In terms of the iron ore supply, SMM data shows that last week (July 25 to July 31), the arrivals of iron ore at major ports in China totalled 22.5648 million mt, a decrease of 6.92% from the previous week. Among them, the shipments from Australia stood at 15.57 million mt, up 9.6% on the week, and those from Brazil amounted to 3.02 million mt, down 22.8% on a weekly basis.
As of July 29, the total inventory of iron ore across the 35 ports tracked by SMM stood at 1.3139 million mt, which has been accumulating for five consecutive weeks. Considering that demand in the off-season is weak, and the resumption of production of steel mills is slow, the ore prices lacks sufficient momentum to rise further. SMM believes that the iron ore prices will remain volatile in the short term. The change in the average spot prices of MMi 62% iron ore is expected to run between -50 yuan/mt and 50 yuan/mt.