Iron Ore Fundamentals See Increase in Both Supply and Demand, May Fluctuate at Highs in the Short Term [SMM Brief Comment]

Today, the most-traded iron ore futures contract I2601 continued to fall sharply, closing at 775, down 2.94% from yesterday. Traders' willingness to sell was weak; steel mills purchased as needed, with moderate inquiries. The market transaction atmosphere was average. In Shandong, the mainstream transaction prices for PB fines were around 770-773 yuan/mt, a significant drop of 15-20 yuan/mt from yesterday; in Tangshan, the transaction prices for PB fines were around 780-785 yuan/mt, also down 15-20 yuan/mt from yesterday.

Today's industry data showed that the apparent demand for the five major types of steel continued to decline. With steel mill production at high levels, inventory accumulation accelerated, further highlighting inventory pressure. As a result, bearish sentiment in the market intensified, putting significant downward pressure on iron ore prices. SMM's latest survey indicated that during the period of environmental protection-driven production restrictions in the north, some steel mills advanced their annual maintenance, which is expected to lead to a pullback in daily average hot metal production, suppressing iron ore prices. In the short term, ore prices are likely to remain in the doldrums. Market participants are advised to closely monitor the marginal impact of steel mill production cuts.