The inventory buildup of the five major steel products has intensified, pushing down iron ore prices significantly [SMM Commentary]

Today, Dalian iron ore futures continued to decline sharply, with the most-traded contract I2601 closing at 775, down 2.94% from yesterday. Traders' willingness to sell was weak; steel mills 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 770-773 yuan/mt, a significant drop of 15-20 yuan/mt from yesterday's prices; in the Tangshan region, the transaction prices of PB fines were around 780-785 yuan/mt, down 15-20 yuan/mt from yesterday's prices.

From today's industrial data, the apparent demand for the five major steel products continued to decline. With steel mill production remaining high, the rate of inventory accumulation accelerated, further highlighting inventory pressure. Affected by this, bearish sentiment in the market intensified, exerting significant downward pressure on iron ore prices. The latest SMM survey shows that during the environmental protection-driven production restrictions in the north, some steel mills have advanced their annual maintenance, which is expected to drive down the daily average production of hot metal, suppressing iron ore prices. In the short term, ore prices may remain in the doldrums. It is recommended that market participants closely monitor the marginal impact of the extent of production cuts by steel mills.