High Inventory Suppresses Prices, Iron Ore Prices Continue to Decline [SMM Brief Review]

DCE iron ore futures weakened today, with the most-traded contract I2605 settling at 784.5 yuan/mt, down 0.95% from the previous session. Spot prices fell about 2-7 yuan/mt. Traders' quoting enthusiasm was moderate, mostly following the market trend, while steel mills purchased as needed with many inquiries, resulting in an overall average trading atmosphere.

On fundamental data, according to SMM shipping data, global iron ore shipments totaled 29.84 million mt last week, up 310,000 mt (+1%) WoW. Shipments from Australia and other non-mainstream origins slightly declined, while Brazil's shipments rebounded WoW. Meanwhile, China's port arrivals reached 27.41 million mt, up 730,000 mt (+2.7%) WoW.

On basic data, supply side, China's port inventory reached a three-year high, with the inventory buildup trend showing no clear inflection point, and oversupply pressure continued to accumulate. Demand side, despite the Chinese New Year restocking window opening, steel mills' restocking strategy focused mainly on varieties with ample inventory, lacking acceptance for high-priced resources, which prevented restocking activities from providing strong support to overall ore prices. Overall, iron ore prices were expected to fluctuate rangebound with a weak bias in the near term.