Iron ore fundamentals are expected to weaken, and ore prices are under pressure, remaining in the doldrums [SMM Brief Comment]

Today, the iron ore futures market showed a weakening trend, with the most-traded contract I2601 closing at 788.5 yuan, down 0.32% from the previous trading day. Traders demonstrated a moderate willingness to sell, while steel mills purchased as needed. Overall market trading sentiment was average. In Shandong, transaction prices for PB fines ranged between 785-790 yuan, down 0-2 yuan/mt from yesterday's levels; in Hebei, transaction prices for 60.8% PB fines were between 793-797 yuan/mt, down 2-3 yuan/mt from the previous day.

Due to extended maintenance at steel mills, total production of major steel products remained high this week. Although apparent consumption saw a slight rebound and port inventories edged down, current steel inventory levels were still elevated on a YoY basis, and the market generally held a pessimistic view on subsequent inventory pressure at steel mills. Against this backdrop, iron ore prices remained under pressure and were in the doldrums. However, as hot metal production did not decline as expected, actual demand continued to provide some support to ore prices, limiting further downside room. Looking ahead, given expectations of a weakening fundamental outlook for iron ore, ore prices are expected to remain under pressure and exhibit a fluctuating trend.