Production Restrictions in Tangshan Tighten Again, Iron Ore Under Pressure and in the Doldrums [SMM Brief Review]

Today, the most-traded iron ore futures contract traded in the doldrums, with the most-traded contract I2601 closing at 771, down 0.58% from the previous day. Mainstream spot cargo prices at ports fell by 2-5 yuan compared to the previous working day. In Shandong, the transaction price for PB fines was 775-780 yuan, down 2-5 yuan/mt from the previous day; in Hebei, the transaction price for PB fines was 790-795 yuan/mt, down 5 yuan/mt from the previous day. Steel mills' purchase willingness weakened, and traders mainly sold at appropriate prices. Overall market transactions were moderate. This week, steel mills' procurement demand weakened, port pick-up volume declined, and port inventory accumulated at an accelerated pace. Looking ahead to next week, Tangshan city is expected to introduce stricter environmental protection-driven production restriction policies to address air quality issues, which are anticipated to suppress the operating rates of sintering machines and blast furnaces, further weakening iron ore demand and keeping ore prices under pressure in the short term. However, the downside room may be limited by the upcoming bilateral talks between China and the US and the support from macro sentiment due to expectations for US Fed interest rate cuts, suggesting that the downside room for ore prices may be relatively limited.