Price trend

Since July, the iron ore market first fluctuated upward, then rose and fell, and the overall trend was stronger and upward. According to the iron ore price tracking data of SunSirs, as of the 30th, the iron ore price index of SunSirs was 799.11 points, up 10.46% from the previous month. Among them, it reached the highest point of the month at 800.44 points on the 9th, with an increase of 10.64%, as shown in the figure above.

Analysis review

Looking back at the iron ore market in July, the price of iron ore first fluctuated upward, and then rose and fell. The data analysts of SunSirs believe that it can be roughly divided into two stages: the first is a volatile upward trend. In the first and middle weeks of July, although the terminal off-season effect continued, the profit level of steel mills was good, and the enthusiasm of steel mills to start production was good, which affected the release of iron ore demand, thereby forming a certain support for the price of iron ore. In addition, the market was affected by the "anti-involution" news, and the trading sentiment was positive, which in turn pulled up the price of iron ore, so the price of iron ore showed a volatile upward trend.

Secondly, it surged and then fell. By mid-to-late July, due to the increasingly prominent off-season effect in downstream industries, the restocking operation in the downstream building materials market slowed down, steel transaction volume weakened, and some steel mills began maintenance operations. The output of molten iron declined. The fundamentals of iron ore showed a pattern of increased supply and decreased demand. The output of molten iron in July showed a downward trend. In addition, the market sentiment cooled, which led to a decline in the spot price of iron ore. Therefore, the price of ore showed a trend of surge and then fall.

As of July 25th, imported iron ore inventories at 45 ports nationwide stood at 137.9038 million tons, a weekly increase of 51,700 tons and a monthly decrease of 1.3985 million tons. Daily port throughput was 3.1515 million tons, a weekly decrease of 75,900 tons and a monthly decrease of 10.79 tons. The number of vessels at port was 102, an increase of 17 compared to the end of June.  Total imported iron ore inventories at steel mills nationwide stood at 88.8522 million tons, a monthly increase of 377,500 tons. Since July, steel mills have enjoyed strong profits and maintained high production capacity, leading to increased demand for delivery, which has maintained high daily port throughput. This positive profit environment has encouraged increased production at steel mills, leading to a continuous depletion of on-site inventories. However, after mid-to-late July, overseas shipments resumed, and port inventories began to stabilize. At this stage, the subsequent steel market situation still depends on the downstream steel transaction situation. If the steel market can still maintain the current transaction volume in August, the resilience of steel mills' iron ore demand can be expected, and the iron ore port inventory may continue to decline.

On the supply side, as of July 28th, global iron ore shipments totaled 32.009 million tons last week, a month-on-month increase of 918,000 tons. Total iron ore shipments from 19 ports in Australia and Brazil reached 26.778 million tons, a month-on-month increase of 1.988 million tons. Australia shipped 18.596 million tons, a month-on-month increase of 2.302 million tons. Of this, Australia shipped 15.504 million tons to China, a month-on-month increase of 1.068 million tons. Brazil shipped 8.964 million tons, a month-on-month decrease of 262,000 tons. Due to seasonal factors, overseas shipments began to recover in July. With rising iron ore prices in July, overseas shipments were active. Port arrivals are expected to remain high in August, especially as the weather improves. Overall supply is expected to remain relaxed in August.

On the demand side, steel mill blast furnace operations remained generally stable at high levels in July, primarily due to relatively high and stable profits, strong production enthusiasm, and high hot metal production. Due to increasing restrictions on downstream operations in July, steel transaction volume also decreased. In the short term, steel mill profits can still support current production levels. However, as the industry's off-season continues to take hold and downstream procurement slows, steel mills in some regions will increase maintenance plans, resulting in a reduction in hot metal production. However, the specific extent of the increase will depend on steel mill profits and downstream steel transaction conditions. Iron ore demand may decrease slightly in early August.

Regarding scrap steel, prices have initially risen and then stabilized since July, trending higher. This was primarily driven by the overall upward trend in ferrous metals, which in turn impacted scrap steel prices. Since July, steel mill profits have improved, with mills operating at high levels and blast furnaces resuming production. Following the decline in iron ore prices, steel mills have become more inclined toward iron ore as a raw material. Furthermore, the continued impact of the "anti-involution" movement in July has been positive for the scrap steel market, and it’s expected there is a narrow range of fluctuations in the scrap steel market in August.

Future outlook:

In summary, data analysts at SunSirs believe that on the demand side, steel mill profits improved in July, blast furnace utilization remained high, and hot metal production also remained high. Maintenance at several steel mills in August negatively impacts demand. On the supply side, seasonal factors impacted July, with overseas shipments resuming and overall port inventories declining and then increasing. Overseas shipments were strong in July, and overall supply remained strong. The steel market remains in the off-season in August, and many steel mills will undergo maintenance, which negatively impacts the destocking process at ports. Overall, the iron ore supply and demand fundamentals in August may shift to a situation of increasing supply and decreasing demand. Overall, steel mill profits are temporarily healthy, and iron ore demand remains resilient. It’s expected iron ore prices rise before falling in early August, fluctuating within a narrow range.

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