Pre-holiday replenishment raised iron ore prices to a new level. Coupled with two consecutive rounds of coke price hikes, steel mills’ losses worsened. Almost all domestic steel mills were in losses.
In particular, regions such as Shanxi, Henan, Yunnan suffered the most serious losses, and the number of blast furnace shutdowns for maintenance was increasing. Besides, many steel mills in Hebei, Jiangsu and Northeast China advanced their blast furnace annual maintenance plans due to losses. Therefore, in the first week after the holiday, the demand for post-holiday replenishment did not appear as expected.
The overall demand for iron ore declined. However, pig iron output remained high, port inventories continue to be destocked, and spot resources were still tight, forming support for prices and fuelling transactions in the forward spot market. In addition, post-holiday macro policy news frequently spread, which improved market sentiment. Iron ore futures prices fell initially and then rose last week, showing a minor downward movement. However, the spot prices of PB fines at ports in Shandong lost 10 yuan/mt on a weekly basis.
This week, if the third price hike of coke prices is fulfilled, steel mill’s losses will deepen, which may lead to an increase in the number of blast furnace shutdowns for maintenance, thus dealing a big blow to iron ore demand. Besides, important conferences such as “One Belt, One Road” to be held in Beijing this week may tighten environmental-protection production restrictions, reducing demand in Hebei to some extent.
Overseas shipments rose significantly at the end of September, so it is expected that the arrivals will increase this week. The imbalance between supply and demand continued to increase. Considering that the market still holds expectations for economic stimulus policies, iron ore prices are difficult to drop. It is estimated that ore prices will fluctuate downward this week.
Source: Metal
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