Hot Metal Increase Falls Short of Expectations, Iron Ore Price Drivers Remain Moderate [SMM Brief Comment]

Today, the most-traded iron ore futures contract held up well during the day, with the most-traded contract I2601 closing at 804.5, down 0.12% from the previous trading day. Traders showed moderate enthusiasm for shipments; steel mills mainly purchased as needed. Market transaction sentiment was average. In the Shandong region, mainstream transaction prices for PB fines were around 795-798 yuan/mt, up 0-3 yuan/mt from yesterday; in the Tangshan region, transaction prices for PB fines were 800-810 yuan/mt, flat from yesterday.

According to an SMM survey, on September 17, the blast furnace operating rate at 242 steel mills surveyed by SMM was 86.38%, up 0.22 percentage points MoM. The daily average hot metal production at the sampled steel mills was 2.3983 million mt, up 5,400 mt MoM. Currently, steel mill profits are shrinking, and some enterprises are more willing to conduct maintenance, leading to a gradual increase in the number of blast furnaces under maintenance, resulting in this week's overall hot metal increment falling short of expectations. However, overall iron ore demand remains relatively resilient, providing support for spot iron ore prices. In addition, the US Fed is expected to cut interest rates soon, and market expectations for China's future monetary policy are strong. It is expected that ore prices will hover at highs in the short term.