Hot Metal Production Is Expected to Bottom Out, Iron Ore Prices Continue to Move Sideways [SMM Brief Review]

DCE iron ore futures first weakened then strengthened today, with the most-traded contract I2605 finally settling at 779.5, up a slight 0.26% from the previous working day. Traders showed moderate willingness to sell; steel mills purchased as needed, with a moderate number of inquiries. Market transaction sentiment was moderate. In Shandong, the transaction price for PB fines was 785-795 yuan, basically stable from yesterday's price; in Hebei, the transaction price for PB fines was 805-810 yuan/mt, also basically stable from yesterday's price.

According to an SMM survey, on December 24, the daily average hot metal production of the 242 steel mills surveyed by SMM was 2.3431 million mt, down 4,600 mt WoW. This week, blast furnaces that underwent routine annual maintenance resumed production as scheduled, contributing some increment to hot metal output. However, pressure from environmental protection-driven production restrictions remains significant, with maintenance schedules still in place for blast furnaces at steel mills in parts of Hebei and Liaoning, leading to an overall declining trend in hot metal production. Hot metal output is expected to reach a temporary bottom next week; after entering January, some production-controlled blast furnaces will gradually resume operations, driving a slow recovery in hot metal output. This will also provide some support for ore prices. In the short term, iron ore demand is at a bottom, port inventories continue to show a buildup trend, making it difficult for ore prices to break upward. Prices are expected to continue moving sideways.