U.S. and Iran Expected to Sign Memorandum, Iron Ore Prices Follow Suit with 0.72% Increase [SMM Daily Brief on Imported Ore]

The most-traded iron ore contract held steady with an upward bias today, with the most-traded contract I2609 closing at 771.5 yuan/mt, up 0.72% from the previous trading session. Port spot prices rose 3–5 yuan/mt from the day before. Traders showed fairly strong offering interest, but steel mills’ wait-and-see sentiment deepened and purchase willingness remained weak. Market trading sentiment was sluggish, and spot trading volume has been low so far today.

The U.S.–Iran memorandum of understanding has been reached and is expected to be formally signed on the 19th, with the conflict likely to come to an end, which is positive for the global economy and lent some strength to iron ore prices. From a fundamental perspective, however, last week’s SMM shipping data showed that, driven by quarter-end target pushing, shipments from both Australia and Brazil rose, while shipments from non-mainstream countries such as South Africa and India also increased, meaning that incremental supply-side additions continue to cap upside room for iron ore. Moreover, with the seventh round of coke price cuts taking effect today, steel mill losses worsened in some regions. Combined with soft demand during the off-season, some steelmakers may bring forward blast furnace maintenance, and expectations of weaker iron ore demand are emerging. On balance, iron ore faces considerable resistance to the upside and is likely to move sideways in a narrow range in the near term.