Steel Mill Accident Leads to Decline in Demand, Iron Ore Prices Drop Significantly [SMM Brief Review]

Today, iron ore futures declined significantly, with the most-traded contract I2605 closing at 794 yuan/mt, down 2.58% from the previous trading day. Spot prices dropped by 10-15 yuan/mt. Traders' quoting enthusiasm was moderate; steel mills showed limited inquiry, with procurement mainly for daily restocking. Overall market trading sentiment was neutral.

The price decline was primarily driven by market rumors of an accident at Baogang that caused a sharp drop in pig iron production, triggering panic sentiment. It is expected that the accident may affect two blast furnaces, with daily average hot metal production of approximately 16,000 mt, but production at other steel mills in the region was not impacted by the incident. Pessimistic market sentiment led to a noticeable decline in iron ore prices. However, as pre-holiday stockpiling by steel mills has commenced, spot demand provided some support to ore prices. Overall, the fundamentals of iron ore remain supportive, and prices have the potential to rebound in the later period.