Expectations dashed and rumors of production restrictions suppress iron ore prices, moving downwards after a higher opening [SMM Commentary]

Today, DCE iron ore futures opened higher and moved downwards, trading in the doldrums throughout the day. The most-traded contract I2509 eventually closed at 789, with a daily decline of 0.44%. Traders sold goods according to market conditions; steel mills adopted a wait-and-see attitude, with some purchasing at lower prices. The market transaction atmosphere was average. The mainstream transaction prices of PB fines in Shandong were around 774 yuan/mt, down 6 yuan/mt from yesterday's prices; the transaction prices of PB fines in Tangshan were around 785-790 yuan/mt, down 5-10 yuan/mt from yesterday's prices.

Market news indicated that Zhao Minge, President of the China Iron and Steel Association, stated that China would continue to implement crude steel production control policies in 2025, with relevant measures expected to take effect in the second half of the year. Meanwhile, there were rumors that during the September 3 military parade, north China would implement environmental protection-driven production restrictions for at least two weeks, potentially suppressing iron ore demand. However, SMM announced today that the daily average hot metal production this week slightly decreased, and there were no new blast furnace maintenance plans for steel mills in the short term. The sustained high hot metal production supported ore prices. However, market expectations weakened after the Political Bureau meeting, and it is expected that ore prices will lack upward momentum in the short term, maintaining a weak and rangebound fluctuation pattern.