SMM review and forecast for imported iron ore (Aug 7)

SHANGHAI, Aug 7 (SMM) –

The most-traded DCE 2401 iron ore contract fell down after climbing last Friday, and closed down 0.75% at 725.5 yuan/mt. Selling appetites from iron ore traders picked up, while buying appetites from steel mills appeared soft. Under such circumstance, the overall transaction sentiment appeared illiquid. The transaction prices of PB fines in Shandong stood at 850-855 yuan/mt, up 15 yuan/mt on the day. Currently, the iron ore market largely saw ample supply and muted demand. Rebar/iron ore ratio kept narrowing, and profits of steel mills squeezed. Therefore, a deep cut in demand for iron ore may be reported. Iron ore inventory at ports stayed low, while unbalanced supply-demand fundamentals may appear in a short term. In addition, given lingering macro policy expectations, iron ore futures prices are unlikely to decline sharply. In addition, the most-traded DCE iron ore contract shifted to the I2401 contract during this week, and the I2401 contract appeared active. At this stage, players expected the I2401 contract to weaken. It is necessary to pay attention to the implementation of crude steel production limitation policy and changes on the profits of steel mills.