Prices Firmed; Spot Iron Ore Trading Was Sluggish [SMM Daily Iron Ore Brief Commentary]

Iron ore futures consolidated on a strong note today. The most-traded DCE contract I2701 settled at 723 yuan/mt, up 0.91% from the previous trading day. In the spot market, prices of mainstream grades rose by 5–7 yuan/mt. Most traders followed the market and actively sold, but as Friday approached and futures held up well, steel mills made fewer inquiries and purchase willingness declined, leaving overall trading sentiment sluggish. As of August 28, the latest SMM data showed that total iron ore inventory at 35 main ports nationwide stood at 145.61 million mt, edging up 70,000 mt MoM; the daily average port pick-up volume fell 46,000 mt MoM to 3.09 million mt. Port inventory rose this week, mainly because port arrivals rebounded overall, while hot metal production of steel mill blast furnaces continued to decline, weakening purchase willingness for iron ore concentrates in tandem. With port cargo pick-up weakening, inventory accumulation pressure gradually became evident amid a loose supply and demand balance. Hot metal production is expected to grow next week, but with coke prices continuing to squeeze steel mill profits, the increase is expected to be limited. Iron ore prices are likely to remain under pressure, and overall are still expected to consolidate on a strong note in tandem with ferrous metals.