Price trend

According to data from the SunSirs' commodity market analysis system, iron ore prices continued to rise and trended upward last week (October 25-31). As of the 31st, the SunSirs' iron ore price index was 817.44 points, up 2.61% week-on-week, as shown in the chart above. The continued upward trend and upward momentum in iron ore prices last week was mainly due to positive macroeconomic factors boosting market sentiment, leading to increased speculative trading and a recovery in market activity, thus driving up iron ore prices.

Analysis review

Regarding inventory, as of October 31, the total imported iron ore inventory at 45 ports nationwide was 145.4248 million tons, an increase of 1.1889 million tons week-on-week; the average daily port throughput was 3.2016 million tons, an increase of 75,100 tons week-on-week; and the number of ships in port was 1,118, an increase of 11 week-on-week. The port inventory situation for iron ore last week was shown in the chart above. The total imported iron ore inventory at steel mills nationwide was 88.4986 million tons, a decrease of 2.2933 million tons week-on-week. The decline in steel mill profits last week suppressed demand for delivery, resulting in a decrease in port throughput. With increased overseas shipments and more ships at ports last week, there is a high probability that port inventories will continue to accumulate. Next week, close attention should be paid to changes in port iron ore inventories.

On the supply side, as of October 27th, global iron ore shipments totaled 33.884 million tons last week, an increase of 548,000 tons week-on-week; shipments from Australia and Brazil totaled 29.259 million tons, an increase of 1.008 million tons week-on-week. Australian shipments totaled 19.843 million tons, a decrease of 2,000 tons week-on-week, of which 16.253 million tons were shipped to China, a decrease of 626,000 tons week-on-week. Brazilian shipments totaled 9.415 million tons, an increase of 1.01 million tons week-on-week. Last week, Australian shipments declined slightly, while Brazilian shipments increased slightly. The cyclical changes in overseas shipments from Australia and Brazil were mainly affected by seasons and weather. While short-term shipments may fluctuate, the medium- to long-term iron ore supply situation remained ample. With the traditional peak season approaching, traders were more willing to ship, and iron ore shipments may decline slightly next week, resulting in a slight reduction in iron ore supply.

On the demand side, as of October 31, the blast furnace operating rate of steel mills was 81.75%, a decrease of 2.96% week-on-week; the blast furnace ironmaking capacity utilization rate was 88.61%, a decrease of 1.33% week-on-week; the steel mill profit margin was 45.02%, a decrease of 2.6% week-on-week; the average daily pig iron output was 2.3636 million tons, a decrease of 35,400 tons week-on-week; and the daily consumption of imported iron ore at sample steel mills was 2.9162 million tons, a decrease of 48,400 tons week-on-week. Last week, steel mill operating rates declined, especially as steel mill profits further decreased due to rising raw material prices. Spontaneous production cuts by steel mills led to a decline in pig iron output. Although more steel mills are expected to resume production next week, lower-than-expected finished steel transactions may further reduce steel mill profits, negatively impacting demand release. It is anticipated that iron ore demand release may slightly decrease next week.

Regarding scrap steel, prices declined slightly last week, trending weaker. Last week, scrap steel prices continued to weaken, mainly due to sluggish demand for finished steel products. Lower finished steel prices led to reduced profits for steel mills, resulting in lower operating rates and hindering the release of scrap steel demand. Consequently, scrap steel prices also declined, with some adjustments in certain regions. The scrap steel market is expected to remain weak next week.

Market outlook

In summary, according to analysts at SunSirs, on the demand side, declining steel mill profits led to voluntary production cuts, negatively impacting iron ore demand. On the supply side, while overseas shipments saw cyclical changes last week, port inventories continued to accumulate, suggesting a potential decline in overseas shipments next week and a reduction in supply. This shifted the iron ore supply-demand fundamentals to a situation of weak supply and demand, overall bearish for iron ore prices. Last week, major markets were influenced by macroeconomic news from the meeting, driving up iron ore prices. However, with high short-term port inventories, iron ore prices are expected to continue declining and fluctuate weakly next week. Going forward, attention should be paid to steel mill profit conditions and the actual demand from downstream finished steel products.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.