Weekly Review
This week, imported iron ore prices continued to fall. After the Two Sessions, market expectations for macro policies were unmet, and with the domestic LPR remaining stable this week, overall macro sentiment was relatively pessimistic. Fundamentally, due to rainfall in northern and southeastern Brazil, shipments dropped significantly, dragging global shipments down by over 10% MoM; however, port arrivals increased by nearly 30% MoM. Inventory levels turned from decline to increase. On the demand side, as downstream demand continued to grow, blast furnaces across regions resumed production actively, with daily average pig iron production up 19,000 mt MoM. Both supply and demand were strong, but the fundamentals provided limited support to ore prices. Iron ore prices mainly followed the downward trend of finished steel. In terms of port prices, PB fines in Shandong fell 8 yuan/mt WoW.
Chart: SMM 62% Imported Ore MMI Index
Data Source: SMM
Domestic ore prices decreased slightly this week and are expected to remain stable with a weak trend next week.Prices in Tangshan, Qian'an, and Qianxi, Hebei, decreased by 5-10 yuan/mt, while prices in west Liaoning, Chaoyang, Beipiao, and Jianping also declined by 5-10 yuan/mt; prices in east China rose by 5-10 yuan/mt.
Shandong iron ore concentrate prices showed a slight downward trend, with 66-grade dry basis tax-inclusive delivery-to-factory prices down 10 yuan, now at 950-955 yuan/mt. Steel mills were generally cautious in purchasing, mostly purchasing as needed, with domestic ore inventory maintained at around 5-7 days, and few restocking activities. The overall operation rate of beneficiation plants was low, and due to the relatively firm prices of low-grade raw materials, processing profits were negative, leading to weak production enthusiasm. The resumption of major mines remained slow, and the overall tight supply trend of domestic iron ore did not change, supporting domestic iron ore concentrate prices. However, the cost-effectiveness of domestic iron ore concentrates compared to imported ores has weakened.
Iron ore concentrate prices in west Liaoning were relatively stable recently, with 66-grade wet basis tax-excluded ex-factory prices at 710-720 yuan/mt. It is understood that local mines and beneficiation plants are facing safety inspections again, which may affect some plants. Local iron ore concentrate resources remain tight. Local steel mills indicated that although the heating season is about to end, given the current moderate profits, some mills have postponed maintenance, providing some support to iron ore concentrate demand.
Production in the east China region was relatively stable, but according to local mines and beneficiation plants, the demand for single magnetite was good, while the overall demand for spiegeleisen was weaker, and the demand for high-grade fines was higher than for low-grade. The resumption of mining in Linyi, Shandong, may see a turnaround soon.
Outlook for Next Week
For imported ore:Recent macro policies and data have been fully released, and market sentiment is expected to improve after the release. Additionally, from a fundamental perspective, overseas shipments may increase slightly. However, port arrivals, affected by factors such as the Taiwan Strait drills, are expected to remain at a moderate level with limited room for growth. On the demand side, with steel mill profits being moderate and demand continuing to increase, it is expected that more blast furnaces will resume production, driving an increase in iron ore demand. Therefore, iron ore prices may rebound slightly. However, with the increase in rebar production and narrowing apparent demand, concerns about negative feedback have intensified, making it difficult for iron ore prices to rise, and they are expected to continue fluctuating at a low level next week.
For domestic ore:Overall, recent domestic iron ore prices have been relatively firm, but their cost-effectiveness compared to imported ore has weakened. Even with improved steel mill profits, purchasing remains cautious. Coupled with the weak trend in imported iron ore prices, domestic iron ore prices are expected to remain stable with a weak trend next week.
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