Hot metal production is expected to decline, suppressing iron ore prices in the doldrums [SMM Brief Comment]

Today, the most-traded iron ore futures contract I2601 continued to be in the doldrums, closing at 769, down 0.19% from yesterday. Traders' willingness to sell was moderate; steel mills purchased as needed, with few inquiries. The market transaction atmosphere was average. Due to prolonged vehicle control, some steel mills have increased their transportation of materials from ports to their premises. In Shandong, the mainstream transaction prices for PB fines were around 765-768 yuan/mt, down 2-5 yuan/mt from yesterday; in Tangshan, the transaction prices for PB fines were around 775-780 yuan/mt, down 5 yuan/mt from yesterday.
According to an SMM survey, on August 20, the operating rate of blast furnaces at 242 steel mills tracked by SMM was 86.27%, down 0.22 percentage points MoM. The daily average hot metal production of the sample steel mills was 2.4125 million mt, up 0.02 million mt MoM. This week, domestic blast furnaces mainly resumed production. Next week, steel mill production will remain relatively stable, with limited fluctuations in hot metal output. However, due to environmental protection-driven production restrictions for the military parade, some steel mills will gradually schedule maintenance at month-end. According to SMM's current tracking, it is expected that overall hot metal production will significantly decrease, putting pressure on iron ore prices and leading to a weak and volatile market.