High profits make it difficult to reduce pig iron production, supporting the rebound in iron ore prices [SMM Commentary]

Today, Dalian iron ore futures continued to fluctuate rangebound in a relatively strong position, with the most-traded contract I2509 closing at 736.5, up 0.68% for the day. Traders' willingness to sell was moderate. Steel mills mainly purchased as needed, and inquiries were moderate. The market transaction atmosphere was good. The mainstream transaction prices of PB fines in the Shandong region were around 726 yuan/mt, up 2-3 yuan/mt from yesterday; the transaction prices of PB fines in the Tangshan region were around 735-740 yuan/mt, up 2-5 yuan/mt from yesterday.

 On July 9, the operating rate of blast furnaces at 242 steel mills, as surveyed by SMM, was 87.28%, down 0.26 percentage points MoM. The daily average pig iron production of the sampled steel mills was 2.4118 million mt, down 0.19 million mt MoM. Although pig iron production has declined slightly, supported by high profits at steel mills, the extent of production cuts is limited, and there are expectations for production increase next week, keeping iron ore demand at a high level. Additionally, as overseas mines enter the maintenance period in July, shipments have pulled back, further tightening the supply and demand structure of iron ore. The fundamentals continue to support ore prices in extending their rebound trend.

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