Weekly Review

This week, imported iron ore prices weakened initially before strengthening. During this macro data vacuum period, iron ore prices were mainly influenced by market sentiment and fundamentals. Fundamentals side, according to SMM shipping data, global shipments decreased slightly by 7.7% WoW, while port arrivals increased by 5.2% WoW. Demand side, the number of blast furnaces resuming production exceeded those under maintenance, leading to a rebound in daily pig iron production by 15,100 mt this week. Coupled with increased pre-holiday procurement by some steel mills, overall demand for iron ore grew. However, due to pessimistic expectations for future demand, market sentiment remained weak. As a result, iron ore futures prices were relatively weak this week, while spot prices were stronger than futures, leading to a wider spread between futures and spot prices. At the port level, PB fines prices in Shandong fell by 10-15 yuan/mt WoW.

Chart: SMM 62% Imported Ore MMi Index

Data Source: SMM

Domestic Ore Prices Fell Slightly This Week; Domestic Ore Prices Are Expected to Fluctuate Downward Next Week

This week, prices in Tangshan, Qian'an, and Qianxi in Hebei fell by 10-20 yuan/mt, while prices in west Liaoning, Chaoyang, Beipiao, and Jianping dropped by 10-20 yuan/mt. Prices in east China decreased by 1-5 yuan/mt.

RecentlyHebei RegionThe iron ore concentrates market remained generally stable, with local steel mills maintaining a strong desire to bargain down prices. In the Tangshan area, supply-side beneficiation plants and suppliers faced losses, leading to low production willingness among local beneficiation plants. In Chengde, a water inrush accident at a large private mine last month resulted in stricter safety inspections, hindering some underground mining and beneficiation production. Overall, local iron ore concentrate resources were tight, providing some support for prices. Considering the recent bearish trend in iron ore futures, overall market sentiment was weak. In the short term, local iron ore concentrate prices are expected to fluctuate downward.

West Liaoning Domestic OreMarket transactions were scarce, but local leading steel mills showed a strong desire to bargain down prices. Mines and beneficiation plants, considering production costs, showed a strong sentiment to stand firm on quotes, though some adjusted prices based on market conditions for cash flow reasons. Overall, under the current steel mill profit environment, steel mills mainly purchased as needed. Coupled with the recent bearish trend in iron ore futures, market confidence remained weak. In the short term, local iron ore concentrate prices are expected to fluctuate downward.

East China RegionIron ore concentrate production increased slightly as beneficiation plants resumed normal production after annual maintenance. Currently, most sales are made on a production-to-sales basis. From a pricing perspective, the average price index for imported ore fell slightly WoW. Local iron ore concentrate prices are expected to have some downward space next week.

Comparing domestic and imported ore prices, domestic ore prices fell more significantly this week. Next week, the price spread between domestic and imported ore is expected to fluctuate rangebound.

Outlook for Next Week

Imported Ore:Global shipments of imported ore are expected to remain at a medium-to-high level. However, due to high global shipments in December, port arrivals are expected to increase slightly. Demand side, according to SMM blast furnace maintenance data, the number of blast furnaces resuming production next week is expected to exceed those under maintenance, leading to a continued rebound in pig iron production. Additionally, with three weeks remaining until the Chinese New Year, steel mills are expected to be more active in pre-holiday restocking, providing strong support for spot prices. Iron ore prices are expected to fluctuate rangebound next week.

Domestic Ore:Domestic iron ore concentrate resources remain tight, providing some support for prices. However, steel mills are maintaining a strong desire to bargain down prices. Coupled with the recent bearish trend in iron ore futures, domestic iron ore concentrate prices are expected to fluctuate downward next week.

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