Price trend
Since October, iron ore prices fluctuated upwards initially, then surged and fell back, showing an overall strong but volatile trend. According to data from SunSirs' iron ore price tracking, as of the 31st, the SunSirs iron ore price index was 817.44 points, up 3.18% month-on-month. The highest point of the month was 821 points on the 22nd, with an increase of 3.63%, as shown in the chart above.
Looking back at the iron ore market in October, iron ore prices initially fluctuated upwards before rising and then falling back. According to data analysts at SunSirs, the market can be roughly divided into two phases: the first phase was a fluctuating upward trend. At the beginning of the month, driven by expectations of the traditional peak season, steel mill operating rates remained high, pig iron production continued to climb, and coupled with optimistic market expectations for macro policies, iron ore prices fluctuated upwards. Speculative trading sentiment was active, and the resonance between futures and futures prices drove up spot iron ore prices, resulting in a fluctuating upward trend in ore prices.
Secondly, the market experienced a surge followed by a decline. By mid-to-late October, market sentiment shifted rapidly. Downstream demand fell short of expectations, the pace of finished steel inventory reduction slowed, squeezing steel mill profits. Coupled with a continued recovery in overseas shipments, iron ore prices began to fall from their highs. Towards the end of the month, influenced by national meetings, market sentiment improved, and futures prices rallied, driving up spot prices. Therefore, the overall market trend in October was one of a surge followed by a decline, with a generally strong but volatile movement.
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 and 5.422 million tons month-on-month; the average daily port throughput was 3.2016 million tons, an increase of 75,100 tons week-on-week and a decrease of 162,400 tons month-on-month; the number of ships in port was 119, an increase of 20 compared to the end of September. The total imported iron ore inventory at steel mills nationwide was 88.4986 million tons, a decrease of 8.0492 million tons month-on-month. Since October, iron ore inventories at major ports nationwide have continued to accumulate, indicating that the supply growth rate had exceeded the demand growth rate. At the same time, steel mill inventories were also being continuously depleted, releasing subsequent restocking demand, but the continuously accumulating inventory pressure limited the upward potential of iron ore prices.
On the supply side, as of October 27, global iron ore shipments totaled 33.884 million tons last week, a decrease of 870,000 tons month-on-month. Shipments from 19 ports in Australia and Brazil totaled 29.259 million tons, an increase of 1.008 million tons month-on-month; Australian shipments totaled 19.843 million tons, a decrease of 437,000 tons month-on-month. Of this, Australian shipments to China totaled 16.665 million tons, a decrease of 1.049 million tons month-on-month; and Brazilian shipments totaled 9.415 million tons, an increase of 1.054 million tons month-on-month. Global iron ore shipments continued to decline since October. Australian shipments decreased, while shipments from major Brazilian mines have recovered significantly. Australian iron ore shipments to China remained at a high level. With the weakening of weather effects in the Southern Hemisphere, previous arrivals had remained at a high level, and supply-side pressure was gradually emerging.
On the demand side, although the blast furnace operating rate of steel mills remained relatively high in October, weak sales of finished steel products downstream had begun to force steel mills to adjust their production schedules. In particular, demand for construction steel fell short of expectations, leading to proactive production cuts by steel mills in some regions. Considering that current steel mill inventories are already at relatively high levels, the incentive to replenish stocks is expected to be limited, and pig iron production faces the risk of decline.
Regarding scrap steel, prices initially rose and then stabilized in October, following iron ore prices. However, due to weak demand for finished steel products, upward momentum was insufficient. Considering that electric arc furnace steel mills also faced profit pressures, the substitution effect of scrap steel for iron ore was unlikely to increase significantly in October, and the scrap steel market is expected to decline slightly in November.
Market outlook
In summary, according to analysts at SunSirs, on the demand side, steel mill profits gradually shrank in October. Despite the significant resumption of blast furnace production, weak downstream finished steel sales have begun to force steel mills to adjust their production schedules, potentially leading to further profit reductions. Therefore, terminal demand is expected to decrease in November, negatively impacting pig iron demand. On the supply side, global iron ore shipmentscontinued to rebound since October, with overall port inventories accumulating. Overseas shipments were strong in October, resulting in a generally strong supply. Although the steel market entered its traditional peak season in October, and terminal operations recovered somewhat, the recovery was less than expected, leading to a cooling of market sentiment. Overall, the iron ore supply and demand fundamentals may shift to a situation of strong supply and weak demand in November, coupled with seasonally weakening demand and continued accumulation of port inventories. Iron ore prices are expected to decline slightly in early November, trending towards a weaker and volatile pattern.
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