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SMM Analysis: Iron Ore Futures Fell Back and Likely to Rise Recently
Aug 10, 2022 09:45CST
Source:SMM
In conclusion, the demand is growing slowly as steel mills resume the production, and the overseas shipments have declined. It is expected that iron ore prices are likely to rise in the short term.

SHANGHAI, Aug 10 (SMM) - Yesterday, the most-traded iron ore contract continued to fluctuate and dropped 1.36% to 723 yuan/mt as of dailytime closing. Contrary to the market expectation of rallying, the contract extended the falling to closed at 724.5 yuan/mt, down 1.70% during night session.

In the spot market yesterday, traders were less willing to ship, and steel mills mainly restocked as needed. The market transactions were modest. Spot prices of PB fines at ports in Shandong decreased 5-15 yuan/mt from a day ago to 780 yuan/mt, while the transaction prices of ultra-special fines were about 645 yuan/mt, which were 10 yuan/mt lower than the previous day. The transaction prices of PB fines in Tangshan stood at 790 yuan/mt, down 10 yuan/mt from a day ago.

SMM believes that the fall of iron ore prices is normal during the contract settlement. Judging from the current fundamentals, the iron ore prices are expected to go upwards in the short term.

On the supply side, according to SMM statistics, the global iron ore shipments totalled 29.95 million mt last week, a week-on-week decrease of 12.1%. Among them, the shipments from Australia stood at 17.72 million mt, down 6.3% on the week. In particular, the shipments from Australia to China fell 10.7% week-on-week to 13.90 million mt, accounting for 78.5% of the total shipments. The shipments from Brazil stood at 6.50 million mt, down 17.1% on the week, and those from Brazil to China amounted to 2.61 million mt, down 13.6% on a weekly basis and accounting for 40.2% of the total amount. During the same period, the total volume of iron ore arriving at ports in China was 22.5407 million mt, down 3% from the previous week.

On the demand side, as steel mills recovered profits, the resumption of production sped up, and the market sentiment improved. The demand for raw materials in Shandong increased, while the demand in Hebei was not strong due to output restrictions for environmental protection.

In general, the steel mills will stay cautious and maintain a balance between the production and sales in the short term due to the concerns about the sustainability of finished product sales. At the same time, the profits of steel mills have rebounded, but whether the profits will sustain remains in doubts amid rising coke prices and iron ore prices. In conclusion, the demand is growing slowly as steel mills resume the production, and the overseas shipments have declined. It is expected that iron ore prices are likely to rise in the short term.

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