Blast Furnaces Under Maintenance Suppress 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 775.5, down 0.64% from yesterday's price. Traders sold according to market conditions, and the transaction sentiment index slightly improved compared to yesterday; mid-week, steel mills mainly purchased as needed, and today's transaction sentiment index increased. The market trading atmosphere was moderate. In Shandong, the mainstream transaction prices for PB fines were 768-770 yuan/mt, a slight decrease of 0-5 yuan/mt from yesterday; in Tangshan, the transaction prices for PB fines were around 775-780 yuan/mt, basically flat compared to yesterday's prices.

According to the SMM survey, on August 27, the operating rate of blast furnaces at 242 steel mills tracked by SMM was 86.14%, down 0.13 percentage points MoM. The daily average hot metal production of sample steel mills was 2.4121 million mt, down 0.04 million mt MoM. This week, some steel mills have already scheduled early maintenance for their blast furnaces, but at the same time, other regions' blast furnaces are resuming production, resulting in overall hot metal production being roughly flat MoM. Next week, environmental protection-driven production restrictions will have a significant impact, with 10 blast furnaces expected to undergo maintenance, leading to a noticeable decline in hot metal production. However, overall, this production cut cycle is relatively short, and it is expected to have a relatively small impact on ore prices, which will continue to fluctuate rangebound in the near term.