The expectation of increased demand during the peak season suggests that iron ore prices will continue to have upside potential this week

Last week, iron ore prices continued to rise. Supply and demand side, according to SMM shipping data, global iron ore shipments increased 10.9% WoW, returning to seasonal highs. At the same time, iron ore arrivals were also at high levels. Demand side, daily average pig iron production from steel mills continued to decrease by 15,000 mt, leading to a slight decline in iron ore demand. Port inventories increased significantly, creating substantial supply pressure. However, the issuance of domestic special bonds accelerated; coupled with rising expectations of a US Fed rate cut, the overall macro environment warmed up. This significantly boosted iron ore prices, with spot PB fines prices in Shandong ports rising by 27 yuan/mt WoW.
Looking ahead to this week, the recent significant rise in iron ore prices has driven an increase in overseas supply, and global iron ore shipments are expected to remain high, keeping supply ample. Demand side, with the arrival of the peak season, steel demand is expected to increase, and as steel mill profits recover, blast furnaces under maintenance are gradually resuming production, leading to a potential increase in pig iron production. The iron ore fundamentals are strong on both supply and demand sides. Macro side, recent overseas macro data has been impressive, and the market holds strong expectations for future overseas demand growth, coupled with the near certainty of a US Fed rate cut in September, market sentiment is quite optimistic. Overall, iron ore prices are expected to continue to have upside potential this week.