Core Viewpoint:
Looking ahead to next week, Australia's shipments are expected to increase, driving a slight rise in global shipments. Although port arrivals may rebound, the estimated increase is relatively small, and iron ore supply remains ample. On the demand side, according to SMM's blast furnace maintenance data, steel mills in Hebei may resume production after maintenance, but steel mills in Shanxi, Shaanxi, Jiangsu, and other regions have blast furnace maintenance plans, and pig iron production is expected to continue to decline slightly. Additionally, the apparent demand for rebar has recently dropped significantly, and the overall inventory decline has slowed, indicating a pronounced off-season effect. Considering that steel mills will gradually start pre-holiday stockpiling after New Year's Day, this will provide some support for iron ore spot prices. Iron ore prices are expected to fluctuate downward next week, but the downside is limited.
Domestic Ore: Domestic Ore Prices Show Mixed Performance This Week; Prices Are Expected to Fluctuate with a Weak Trend Next Week
This week, prices in Tangshan, Qian'an, and Qianxi in Hebei rose by 10-15 yuan/mt, while prices in west Liaoning, Chaoyang, Beipiao, and Jianping fell by 1-5 yuan/mt; prices in east China dropped by 10-15 yuan/mt.
The Tangshan iron ore concentrates market rose slightly. Currently, supply and demand in the Tangshan market are both weak, with an increasing number of beneficiation plants halting production, particularly in Qianxi and Zunhua. Additionally, beneficiation plants have been shipping out inventory recently, easing inventory pressure. On the demand side, steel mill profits continue to shrink, with some mills already incurring losses, leading to raw material purchases being mostly on an as-needed basis. The market remains in a weak supply-demand balance, and local iron ore concentrate prices are expected to fluctuate downward in the near term.
In west Liaoning, the domestic ore market remains sluggish, with few inquiries or purchases from traders. However, local steel mills and external factors have led to partial price reductions. Due to previous accidents, some mines and beneficiation plants remain shut down, resulting in tight local iron ore concentrate supply. On the demand side, local steel mills show no significant winter stockpiling demand, and the desire to bargain down prices remains strong. The weak supply-demand balance is evident, and local iron ore concentrate prices are expected to fluctuate downward in the short term.
In east China, local production has not changed significantly, with most operations following a production-to-sales model. In Linyi, Shandong, there has been no significant progress in resuming production. From a pricing perspective, the average price index of imported ore fell slightly WoW, and local iron ore concentrate prices are expected to have room for further decline.
Overall, domestic iron ore resources remain tight, providing some support for prices. On the demand side, steel mills show no significant winter stockpiling activity, and under the current profit conditions, the desire to bargain down prices remains strong. The market remains in a supply-demand standoff, and domestic iron ore concentrate prices are expected to fluctuate with a weak trend next week.
Imported Ore: Off-Season Effect Becomes More Pronounced; Iron Ore Prices Are Expected to Continue Fluctuating Downward Next Week
This week, imported iron ore prices fluctuated within a narrow range. From a fundamental perspective, SMM shipping data shows that Brazil's shipments increased significantly by nearly 30% this week, driving global iron ore shipments up slightly by 1.8% WoW. However, port arrivals fell by 9.59%. On the demand side, daily average pig iron production continued to decline by 3,000 mt this week, with the rate of decline narrowing. The iron ore supply landscape remains unchanged. On the macro side, the mid-week fiscal meeting was interpreted positively by the market, boosting market sentiment. As a result, despite weaker fundamentals, iron ore futures prices experienced a temporary rebound this week. In terms of port prices, PB fines in Shandong fell by 10 yuan/mt WoW.
Looking ahead to next week, Australia's shipments are expected to increase, driving a slight rise in global shipments. Although port arrivals may rebound, the estimated increase is relatively small, and iron ore supply remains ample. On the demand side, according to SMM's blast furnace maintenance data, steel mills in Hebei may resume production after maintenance, but steel mills in Shanxi, Shaanxi, Jiangsu, and other regions have blast furnace maintenance plans, and pig iron production is expected to continue to decline slightly. Additionally, the apparent demand for rebar has recently dropped significantly, and the overall inventory decline has slowed, indicating a pronounced off-season effect. Considering that steel mills will gradually start pre-holiday stockpiling after New Year's Day, this will provide some support for iron ore spot prices. Iron ore prices are expected to fluctuate downward next week, but the downside is limited.
Pellet Ore: Lump and Pellet Premiums Slightly Increased This Week; Price Difference Between High, Medium, and Low-Grade Ore Continued to Expand Slightly
35-Port Inventory: Lump and Pellet Premiums Slightly Increased This Week; Price Difference Between High, Medium, and Low-Grade Ore Continued to Expand Slightly
As of December 27, according to SMM monitoring data, total inventory at 35 ports was 144.99 million mt, down 860,000 mt WoW but up 28.15 million mt YoY. The daily average port pick-up volume of imported ore was 3.127 million mt, down 4,000 mt WoW but up 270,000 mt YoY. Due to the impact of previous ore shipments, port arrivals decreased significantly this week. In terms of port pick-up, steel mills' winter stockpiling activity was not active, with most adopting a purchasing-as-needed strategy, leading to a slight decline in port pick-up volume. Overall, due to the significant decline in port arrivals, port inventories showed a destocking trend. Looking ahead to next week, port arrivals are expected to increase. According to SMM's current tracking, steel mills' blast furnace pig iron production may continue to decline, and port pick-up volume may also decrease, leading to a potential slight accumulation in port inventories.
Blast Furnace Maintenance: Annual Maintenance Increases; Pig Iron Production Declines Slightly
According to the SMM survey, as of December 25, the operating rate of blast furnaces at 242 steel mills was 85.37%, down 0.1 percentage point WoW. The capacity utilisation rate of blast furnaces was 86.91%, down 0.1 percentage point WoW. The daily average pig iron production of sample steel mills was 2.3446 million mt, down 3,000 mt WoW.
During this period, six blast furnaces were shut down for maintenance, while five resumed production. Maintenance was mainly concentrated in north and east China. Due to the continued pressure on steel mill profits, some mills in certain regions have again incurred losses. Combined with the impact of annual maintenance plans at some mills, overall pig iron production showed a downward trend. Looking ahead to next week, under the influence of high steel inventories and profit pressures, some steel mills in north, east, and south-west China plan to conduct annual maintenance, and pig iron production is expected to continue to decline slightly.
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