Core Viewpoint:
Looking ahead to next week, global shipments may fall back from highs. Affected by the previous decline in shipments, port arrivals are also expected to decrease. On the demand side, according to SMM's blast furnace maintenance data, some blast furnaces have production resumption plans next week, and pig iron production is expected to rebound. Additionally, considering that steel mills are likely to restock more actively after the New Year holiday, iron ore spot prices are expected to gain some support. Iron ore prices are projected to fluctuate upward next week.
Domestic Ore: Domestic Ore Prices Fell Slightly This Week, Expected to Rise Next Week
This week, prices in Tangshan, Qian'an, and Qianxi in Hebei increased by 5-10 yuan/mt, while prices in west Liaoning, Chaoyang, Beipiao, and Jianping decreased by 1-10 yuan/mt. Prices in east China dropped by 15-20 yuan/mt.
In the Tangshan iron ore concentrates market, prices remained stable, with 66-grade dry basis tax-inclusive delivery prices at 970-980 yuan/mt. Buyers and sellers mostly adopted a wait-and-see attitude, with only a few traders cautiously quoting prices. It is understood that many regions have a low willingness to sell due to losses, limited low-price circulating resources, and intensified losses, leading most to withdraw from the market. Local steel mills reported significant profit pressure and mainly purchased as needed, with a strong desire to bargain down prices. However, considering the recent strong performance of iron ore futures, iron ore concentrate prices may rise slightly next week.
In the west Liaoning market, overall transactions remained sluggish. While external traders showed demand for low-titanium ore, low bids constrained by profits led to limited transactions. Some beneficiation plants, considering cash flow, sold small quantities at market prices, with shipments sent to Hebei. Local steel mills showed weak winter stockpiling intentions, with demand lower than in previous years. Traders expressed concerns about the market outlook, resulting in weak transactions. Overall, as local blast furnace shutdowns for maintenance were not significant, demand for local iron ore concentrates is expected to remain supported, and prices may rise slightly in the short term.
In east China, some mines and beneficiation plants have completed their annual targets and halted production for maintenance as year-end approaches, leading to tight local iron ore concentrate supply. From a pricing perspective, the average price index of imported ore rose slightly this week, and local iron ore concentrate prices are expected to have room for upward movement next week.
In summary, domestic iron ore concentrate resources remain tight, providing some support for prices. With the Chinese New Year holiday approaching, steel mills are expected to restock, potentially driving demand for domestic iron ore concentrates. Domestic iron ore concentrate prices are likely to rise slightly in the near term.
Imported Ore: Pig Iron Production May Rebound, Iron Ore Prices Expected to Fluctuate Upward Next Week
This week, imported iron ore prices fluctuated upward. On the macro side, mixed news had limited impact on the futures market. Fundamentally, SMM shipping data showed that Rio Tinto and BHP engaged in year-end pushes for annual targets, significantly increasing shipments and driving Australia's shipments up by 9.6%. Meanwhile, port arrivals rose slightly by 1.9%. On the demand side, blast furnace maintenance in some steel mills in north and east China led to a further decline in daily pig iron production by 13,700 mt, weakening iron ore demand. However, as the market perceives a relatively small supply-demand imbalance and anticipates pre-holiday restocking, iron ore futures remained resilient. In terms of port prices, PB fines in Shandong remained unchanged from last week.
Looking ahead to next week, global shipments may fall back from highs. Affected by the previous decline in shipments, port arrivals are also expected to decrease. On the demand side, according to SMM's blast furnace maintenance data, some blast furnaces have production resumption plans next week, and pig iron production is expected to rebound. Additionally, considering that steel mills are likely to restock more actively after the New Year holiday, iron ore spot prices are expected to gain some support. Iron ore prices are projected to fluctuate upward next week.
Pellet Ore: Lump and Pellet Premiums Remained Stable, Price Difference Between Medium and Low-Grade Ore Continued to Widen Slightly
35-Port Inventory: Increased Arrivals & Lower Port Pick-Up Volume, Slight Inventory Buildup
As of January 3, according to SMM monitoring, total inventory at 35 ports reached 145.22 million mt, up 240,000 mt WoW and 25.92 million mt YoY. The daily average port pick-up volume of imported ore was 3.08 million mt, down 47,000 mt WoW but up 140,000 mt YoY. During this period, port arrivals increased slightly. On the demand side, steel mills' pig iron production declined, and restocking pace was not evident, leading to a slight decrease in port pick-up volume. Overall, port inventories increased slightly this week. Looking ahead to next week, port arrivals are expected to increase slightly. As year-end approaches, steel mills may accelerate restocking, potentially driving up port pick-up volume and leading to a destocking trend at ports.
Blast Furnace Maintenance: More Annual Maintenance, Pig Iron Production Continues to Decline
According to the SMM survey, as of December 31, the operating rate of 242 steel mills' blast furnaces was 85.07%, down 0.3 percentage points WoW. The capacity utilisation rate of blast furnaces was 86.05%, down 0.86 percentage points WoW. Sample steel mills' daily pig iron production was 2.3309 million mt, down 13,700 mt WoW.
During this period, nine blast furnaces underwent maintenance, mainly in north and east China. As year-end approaches, annual maintenance plans for some blast furnaces have increased significantly, leading to a continued decline in pig iron production. According to SMM tracking data, if blast furnaces under maintenance resume production as planned next week, pig iron production may increase significantly. However, considering current steel mill profitability and environmental protection-driven production restrictions, the actual increase in pig iron production may fall short of expectations.
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