Positive impact of macro news ebbed, iron ore prices may weaken this week

The annual NPC and CPPCC sessions came to an end last week. The session's economic growth rate for next year was relatively rational, lower than market expectations. Positive impact of macro news ebbed. However, the FOMC meeting showed that the Fed's interest rate hikes were basically over and will begin to cut interest rates next year, and the dip will be larger than estimates, fuelling commodity prices. From a fundamental perspective, the volume of iron ore arriving at Chinese ports increased slightly last week. Pig iron output inched up amid restart of some BF steel mills from maintenance. Supply-demand fundamentals remained normal, exerting little impact on ore prices. In a word, iron ore prices first rose and then fell last week, and major prices inched up. In terms of spot prices at ports, the spot prices of PB fines in Shandong gained 13 yuan/mt WoW.

Looking at this week, the amount of overseas shipments will be at a moderate to high level. However, port arrivals may edge down, as recent wind and snow weather may hobble unloading efficiency. On the demand side, in spite of profit slip, steel mills will suffer little, and most of them will still keep production normal. But meanwhile environmental protection-related production restrictions may lead to maintenance of more BFs. Therefore, iron ore demand is expected to remain weak. With upcoming the Spring Festival, some steel mills may stock up in advance. Iron ore prices are expected to weaken this week.