Iron Ore Prices in November Dropped First And Then Rose, Prices Expected to Continue Rising in December

In November, iron ore prices exhibited a "V" shape. The highest price for the I2501 contract reached 806.5 yuan/mt. The early November increase was mainly driven by macro sentiment, with strong domestic policy expectations following the US election. Additionally, pig iron production was still in a slight growth phase. However, after the policies were implemented, market sentiment weakened. Coupled with environmental protection-driven production restrictions in the north affecting steel mill production, iron ore demand declined, and prices began to fall. Entering late November, although end-use demand entered the off-season, industrial data remained moderate. Additionally, the period marked the initial stage of pre-Chinese New Year inventory buildup. Market expectations for two important meetings in December also continued to strengthen. During this period, weather impacts led to a decline in port arrivals, reducing port inventory and slightly easing supply pressure. Iron ore prices hit bottom and rebounded. By the end of November, the average mainstream spot fines price at major ports in Shandong increased by 10-20 yuan/mt MoM from October.

Looking ahead to December, the supply and demand for iron ore are expected to both decline. On the supply side, December iron ore shipments may be increasingly affected by weather, and port arrivals are expected to remain low. On the demand side, steel mill blast furnace maintenance is expected to increase in December, and pig iron production will continue to decline. The supply and demand for iron ore will both be weak. However, considering the political and economic meetings in December, which may set the tone for China's economic direction in 2025, the market generally holds high expectations for favorable policies. Additionally, steel mills will gradually start preparing inventory for the Chinese New Year in December. Therefore, SMM believes that iron ore prices in December may continue to rise, with some upward potential.