Tangshan's environmental protection-driven production restrictions cause interference; iron ore prices are in the doldrums [SMM Brief Comment]

Today, DCE iron ore futures were in the doldrums, with the most-traded contract I2509 closing at 708.5, down 1.32% for the day. Traders' willingness to sell was moderate. Steel mills mainly purchased as needed, with inquiries being average. The market transaction atmosphere was average. In the Shandong region, the mainstream transaction prices of PB fines were around 700 yuan/mt, down 5-8 yuan/mt from yesterday's prices; in the Tangshan region, the transaction prices of PB fines were around 715-720 yuan/mt, down 5-10 yuan/mt from yesterday's prices.

Recently, there have been frequent reports of production cuts on the demand side. Today, the market has heard news that Tangshan will implement environmental protection-driven production restrictions in stages in July. It is understood that currently, steel mills are mainly focusing on production cuts and shutdowns of sintering machines and rotary kilns in the short term, while blast furnace maintenance plans have not yet been initiated. However, the market is concerned that this round of environmental protection-driven production restrictions may last for a relatively long time, potentially affecting pig iron production and thus reducing iron ore demand, dragging ore prices lower. SMM data shows that the impact from blast furnace maintenance increased MoM this week, and pig iron production faces a slight downward risk, which may suppress ore prices. Subsequent attention should be paid to changes in steel mill profits and weekly steel inventory levels.

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