Price trend

According to the SunSirs commodity market analysis system, iron ore prices rose before falling last week (October 19-26, the same below), fluctuating within a narrow range. As of the 26th, the SunSirs Iron Ore Price Index was 794.67 points, up 0.22% month-on-month, as shown in the chart above. The decline followed by a rise in iron ore prices last week, along with narrow fluctuations, was primarily due to the core contradictions in the iron ore market last week, primarily manifested in the negative feedback loop between loose supply and demand caused by deteriorating steel mill profits. Market trading showed significant divergence: mainstream mid-grade ores faced price pressure due to their lack of value for money, while low-grade ores and resources with widening discounts effectively reduced costs, resulting in strong demand. Despite the fundamentals of both supply and demand increasing, port inventories continued to accumulate. The key turning point lay in downstream demand for finished products. While the recent improvement had slightly boosted the market, it had not yet reversed the widespread losses suffered by steel mills. Overall market sentiment remained cautious, with prices primarily fluctuating within a narrow range.

Analysis review

Inventory: As of October 24th, imported iron ore inventories at 45 ports nationwide stood at 144.2359 million tons, a month-on-month increase of 1.4532 million tons. Daily port throughput was 3.1265 million tons, a week-on-week decrease of 30,700 tons. The number of vessels at port was 111, a week-on-week decrease of 16. Total imported iron ore inventories at steel mills nationwide stood at 93.0943 million tons, a week-on-week increase of 3.1638 million tons. Last week's decline in steel mill profits dampened demand for delivery, leading to a decrease in port throughput. With increased overseas shipments and an increase in port vessels last week, port inventories are likely to continue to accumulate significantly. Further monitoring of port iron ore inventory changes will be necessary this week.

On the supply side: As of October 20th, global iron ore shipments totaled 33.335 million tons last week, a month-on-month increase of 1.26 million tons. Total iron ore shipments from Australia and Brazil reached 28.25 million tons, a month-on-month increase of 940,000 tons. Australian shipments totaled 19.845 million tons, a month-on-month increase of 682,000 tons. Of this, 17.291 million tons were shipped to China, a month-on-month increase of 1.446 million tons. Brazilian shipments totaled 8.405 million tons, a month-on-month increase of 258,000 tons. Shipments from Australia and Brazil increased slightly last week. Overseas shipments from Australia and Brazil fluctuated cyclically, primarily due to seasonal and weather factors. While short-term shipments may fluctuate, the medium- to long-term outlook for the ample iron ore supply remains. With the traditional peak season approaching, traders were eager to ship. Iron ore shipments may decline this week, and a slight reduction in iron ore supply is expected.

On the demand side: As of October 24th, the blast furnace operating rate of steel mills was 84.71%, a 0.44% increase from the previous week; the blast furnace ironmaking capacity utilization rate was 89.94%, a 0.39% decrease from the previous week; the steel mill profitability was 47.62%, a 7.79% decrease from the previous week; the average daily molten iron output was 2.399 million tons, a decrease of 10,500 tons from the previous week; and the daily consumption of imported ore by the sample steel mills was 2.9646 million tons, a decrease of 8,900 tons from the previous week. Steel mills operated well last week, but their profits gradually declined due to rising raw material prices, leading to a decline in molten iron output. Although more steel mills will resume production this week, their profits may decline further due to lower finished product prices, which is bearish for steel mill demand. It is expected that the release of iron ore demand may decrease slightly this week.

Scrap Steel: Last week, scrap steel prices saw a slight decline, primarily trending downward. Last week, scrap steel prices were expected to remain weak, primarily due to the overall ferrous metal market. Last week's decline in finished steel prices had led to declining profits for steel mills, weakening their enthusiasm for production and hindering demand for scrap steel. Consequently, scrap steel prices had also declined, with some regions experiencing price adjustments. The scrap steel market is expected to remain weak this week.

Market outlook

In summary, data analysts at SunSirs believe that on the demand side, declining steel mill profits and limited short-term production willingness were negative for iron ore demand. On the supply side, cyclical changes in overseas shipments last week had led to continued port inventories. However, overseas shipments may decline this week, reducing supply. The fundamentals of iron ore supply and demand had shifted to a situation of both supply and demand reduction, which was generally negative for iron ore prices. Last week, the main markets were influenced by macroeconomic news from the conference, driving up iron ore prices. However, with high iron ore port inventories in the short term, iron ore prices are expected to continue to decline and fluctuate to be weaker this week. Later in the week, attention should be paid to steel mill profits and actual demand from downstream finished products.

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