Industry logic returns to fundamentals, iron ore under pressure and in the doldrums [SMM Commentary]

Today, Dalian iron ore futures continued to fluctuate in the doldrums, with the most-traded contract I2509 closing at 783, down 0.19% for the day. Traders sold goods according to market conditions; as the weekend approached, steel mills' purchase willingness weakened somewhat. The market transaction atmosphere was average. The mainstream transaction prices of PB fines in the Shandong region were around 765-767 yuan/mt, up slightly by 2 yuan/mt from yesterday's prices; in the Tangshan region, the transaction prices of PB fines were around 780-783 yuan/mt, up slightly by 2-3 yuan/mt from yesterday's prices.

As of August 1, SMM data showed that the total iron ore inventory at 35 ports nationwide was 130.48 million mt, a decrease of 1.36 million mt WoW. Currently, steel mills have strong enthusiasm for hot metal production from blast furnaces, and overall port cargo pick-up remains high. The accumulation of port inventory is relatively small, and the supply pressure of iron ore is relatively small. However, after entering August, policies entered a lull period, and the proportion of fundamental impacts will increase. There are expectations of production restrictions in the future, and iron ore demand is expected to weaken, putting pressure on ore prices. In addition, the 09 contract is facing delivery, and some funds are shifting to the 01 contract. It is expected that ore prices will continue to fluctuate rangebound and in the doldrums next week.