According to the commodity market analysis system of Business Society, iron ore prices fluctuated within a narrow range last week (August 30 to September 6, same below), rising initially before declining. The narrow range fluctuation stemmed from reduced demand early in the week as steel mills' profit margins narrowed, leading to lower pig iron output and subsequently dragging down ore prices. However, with the traditional peak season approaching, some market traders anticipated a recovery in demand, pushing prices back up. Recent volatility in the ferrous metals market has fueled cautious sentiment, resulting in this week's narrow range fluctuation.
This Week's Price Trend Forecast:
Inventory: As of September 5, imported iron ore stockpiles across 45 major ports totaled 13.2532 million tons, up 623,000 tons week-on-week. Daily average port throughput stood at 3.1778 million tons, down 8,600 tons week-on-week. The number of vessels in port reached 104, an increase of 6 vessels week-on-week. Last week's port inventory situation is illustrated in the chart above. Nationwide steel mill inventories of imported iron ore totaled 89.3987 million tons, down 673,200 tons week-on-week. Last week's reduced mill operations slowed shipment demand, leading to lower port throughput. With increased overseas shipments and declining mill profits, mill production enthusiasm may be constrained next week, potentially causing port inventories to rise. Continued monitoring of port iron ore inventory changes is advised.
On the supply side, as of September 1, global iron ore shipments totaled 35.568 million tons last week, up 2.41 million tons week-on-week. Shipments from Australia and Brazil reached 29.021 million tons, increasing by 1.417 million tons week-on-week. Australian shipments totaled 18.946 million tons, down 502,000 tons week-on-week, with shipments to China at 15.298 million tons, down 1.874 million tons. Brazilian shipments reached 10.075 million tons, up 1.919 million tons week-on-week. This week saw a slight reduction in Australian shipments and a modest increase in Brazilian shipments. The cyclical fluctuations in overseas shipments from Australia and Brazil are primarily influenced by seasonal and weather factors, leading to short-term shipment variations. However, the medium-to-long-term outlook indicates that the supply of iron ore remains ample. As the traditional peak season approaches, suppliers are expected to have stronger shipping intentions, potentially leading to increased iron ore shipments next week. Consequently, iron ore supply conditions are projected to strengthen next week.
On the demand side, as of September 5, the blast furnace operation rate at steel mills stood at 80.4%, down 2.8% week-on-week. The ironmaking capacity utilization rate reached 85.79%, a decrease of 4.23% week-on-week. The steel mill profitability rate was 61.04%, down 2.6% week-on-week. Daily pig iron output averaged 2.2884 million tons, a decrease of 112,900 tons week-on-week. The daily consumption of imported ore at sampled steel mills currently stands at 2.8067 million tons, down 154,300 tons week-on-week. Although mill operating rates declined this week, they remain at elevated levels. Narrowing profits have dampened millers' enthusiasm for production, and environmental restrictions have led to voluntary output cuts, further weighing on iron ore demand. Next week's iron ore demand is expected to see a slight contraction.
Regarding scrap steel, prices trended slightly downward this week, primarily influenced by the broader downturn in the ferrous metals market. Recent narrowing of steel mill profits has constrained production enthusiasm. Production restriction news has also led to price declines in some regions, dampening scrap demand. Prices in certain areas have adjusted accordingly, and the scrap market is expected to remain weak next week.
In summary, SunSirs analysts believe: On the demand side, steel mills' profit margins are gradually shrinking, reducing their willingness to operate. Following the implementation of production restrictions, mills have correspondingly cut output, leading to weaker demand release in the short term. On the supply side, overseas shipments maintained high levels this week due to cyclical variations, while port inventories continued to accumulate. Although overseas shipments may decline next week, port arrivals are expected to increase, leading to stronger supply. The iron ore supply-demand fundamentals are likely to remain characterized by strong supply and weak demand. Downstream terminal procurement remains sluggish in the short term.
Last week's market rebound was primarily driven by sentiment-driven news. However, port inventories may accumulate next week as speculative fervor cools and trading activity diminishes. Iron ore prices are expected to experience a slight decline and weaken in a fluctuating range next week. Future developments will hinge on steel mill profitability and actual downstream demand for finished steel products.
As an integrated internet platform providing benchmark prices, on September 8, the benchmark price of iron ore (Australia) from SunSirs was 797.44 RMB/ton, up 0.43% from the beginning of this month (794.00 RMB/ton).
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