From China Iron and Steel Association ,recent iron ore prices have shown a clear divergence from supply-demand fundamentals. Despite port inventories accumulating to 159 million tons, the Platts 62% iron ore index rose from $102.05 per ton on November 7 to $107.80 per ton on December 2, marking a 5.63% increase. The China Mineral Resources Research Institute believes this divergence reveals the driving forces behind the current market dynamics. Financial capital speculation and trading-linkage hype are irrational factors propelling iron ore prices upward.

The iron ore supply-demand landscape remains persistently loose. On one hand, global shipments remain at historically high levels; On the other hand, due to production losses, the daily average pig iron output of 247 steel mills has steadily declined from the annual high of 2.4564 million tons to 2.3468 million tons by the end of November, indicating a significant reduction in iron ore demand. This supply-strong, demand-weak dynamic has driven port iron ore inventories to accumulate for consecutive weeks, reaching a high of 159 million tons.

The financial attributes of iron ore have significantly strengthened. Since mid-November, trading activity in the iron ore futures market has intensified. On one hand, total open interest in iron ore futures has risen steadily. On the other hand, the net positions of the top ten long and short positions in the main contracts have both increased, indicating heightened competition between bulls and bears. Furthermore, the ratio of long to short positions among the top 20 positions in the main contracts has climbed from 0.95 in early November to 1.07, reflecting a notably stronger bullish sentiment.

Trading and speculative activities amplify price volatility signals. Against a backdrop of easing fundamentals, certain market participants' behaviors distort price signals. Taking the mainstream spot variety PB powder as an example, nearly all recent seaborne spot buyers have been traders, driving the spot premium from zero at the end of October to $1.2/ton on November 24. Speculative buying in the distribution chain has become a key force pushing up spot quotations. Some foreign-backed traders leverage their information and capital advantages to coordinate operations across futures and spot markets, creating artificial scarcity. By manipulating market sentiment for profit, they drive spot prices significantly out of alignment with actual supply-demand dynamics.

Iron ore prices lack the foundation for a sustained upward trend. Looking back to mid-year, the rally driven by both domestic and international macroeconomic expectations concluded in the fourth quarter due to persistently loose supply and demand conditions. Since then, iron ore prices have generally fluctuated within a range, lacking catalysts for a trend-based rise.

The current resurgence of speculative fervor in iron ore prices stems from capital games and trading-linkage speculation. The mounting port inventories and persistently weak actual demand will exert substantial downward pressure on prices, making it difficult for purely speculative activities to drive a sustained upward trend. Industry participants should exercise rational judgment, remain vigilant against the risks of prices deviating from actual industrial supply and demand, and avoid blindly following market trends.

As an integrated internet platform providing benchmark prices, on December 10, the benchmark price of iron ore (Australia) from SunSirs was 796.00 RMB /ton, a decrease of 1.53% compared with the beginning of the month ( 808.33 RMB /ton).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

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