SHANGHAI, Aug 25 (SMM) - Yesterday, iron ore prices were on the rise after opening, and in the end gained 2.65% to close at 716 yuan/mt. The growth in the iron ore prices was mainly driven by favourable macro policies, higher expectation of terminal demand recovery, the improvement of market sentiment towards ferrous metal prices as well as the continuous picking-up of the demand.
On August 24, traders were less willing to ship, and steel mills mainly restocked as needed, so the spot trades were modest. The spot prices of PB fines in Shandong mainly moved between 750-755 yuan/mt, up 5 yuan/mt from the previous trading day; spot prices of PB fines in Tangshan ranged between 755-760 yuan/mt, flat from the previous trading day.
At present, the priority is given to maintaining a steady growth in domestic macro economy as a whole, and the latest LPR reduction also reflects a potentially easing fiscal policies. Therefore, the overall domestic macro sentiment is relatively optimistic. With the arrival of the traditional peak season for ferrous metals and the implementation of policies, the actual terminal demand for steel is likely to improve.
According to SMM data, as of August 24, the average operating rate of blast furnaces stood at 93.16%, up 1.19 percentage points from the previous week. The utilisation rate of blast furnace capacity stood at 94%, up 1.24 percentage points on a weekly basis. The average daily pig iron output of all the steel mills in SMM samples rose 31,800 mt week-on-week to 2.2511 million mt., and the average daily pig iron output of all the domestic steel mills was estimated at 2.6799 million mt, up 37,900 mt on the week.
So far, no other influencing factors have emerged in the market. It still remains to be seen whether the downstream demand for steel will reach its peak. But the current profits of steel mills are acceptable, which boosts the enthusiasm of steel mills to produce and also their demand for iron ore. SMM will continue to pay attention to the port inventory and the sustainability of demand. It is expected that the iron ore prices may continue to fluctuate in the short term.
