Price trend

According to the commodity price analysis system of SunSirs, iron ore prices fluctuated upwards last week (January 17-24), showing a strengthening trend. As of the 24th, the SunSirs iron ore price index was 816.67 points, a decrease of 2.07% compared to the previous week, as shown in the chart above. Last week, iron ore prices fluctuated downwards, showing a weakening trend. The main reason was that the ferrous metals market showed a "macro-driven, finished product-led" pattern this week. In the first half of the week, precious metals rose independently, highlighting safe-haven demand and expectations of interest rate cuts, while industrial products were constrained by weak fundamentals. In the second half of the week, positive macroeconomic factors (such as real estate policies) stimulated optimistic sentiment across the market, but structural differentiation was significant: demand expectations drove finished products to rebound first, while the slow recovery of pig iron production suppressed the actual demand for raw materials. Iron ore and other raw materials only followed the rise in finished products, with the market driven by "strong expectations" rather than proactive inventory replenishment by the industry. The core contradiction lies in whether the positive policy signals can translate into a solid recovery in demand.

Market analysis

Regarding inventory, as of January 23rd, the imported iron ore inventory at 45 ports nationwide was 167.6653 million tons, a week-on-week increase of 2.1143 million tons; the average daily port throughput was 3.1073 million tons, a week-on-week decrease of 91,600 tons; and the number of vessels in port was 122, a week-on-week increase of 2. The total imported iron ore inventory at steel mills nationwide was 93.8882 million tons, a week-on-week increase of 1.266 million tons. Steel mill profits recovered last week, but pig iron production remained stable because steel mills intentionally slowed down demand release, resulting in a decrease in port throughput. Port inventory continued to accumulate last week; although overseas shipments decreased, steel mill demand also decreased simultaneously. The trend of port inventory accumulation is expected to continue next week, and close attention should still be paid to changes in port iron ore inventory.

On the supply side, as of January 19th, the total global iron ore shipments last week amounted to 29.298 million tons, a decrease of 2.511 million tons compared to the previous week. The total shipments from Australia and Brazil reached 22.466 million tons, a decrease of 3.598 million tons week-on-week. Australian shipments totaled 16.88 million tons, a decrease of 2.436 million tons, of which shipments to China amounted to 13.897 million tons, a decrease of 2.624 million tons. Brazilian shipments totaled 5.586 million tons, a decrease of 1.162 million tons. This week saw a significant reduction in shipments from both Australia and Brazil. The cyclical changes in overseas shipments from Australia and Brazil are mainly influenced by seasonal factors and weather conditions. While short-term shipments may fluctuate, the overall iron ore supply remains ample in the medium to long term. However, the industry is currently in a low season until the end of the year, and iron ore shipments and arrivals may decrease next week, but the overall iron ore supply situation is still trending upwards.

On the demand side, as of January 23rd, the operating rate of blast furnaces in steel mills was 78.68%, a week-on-week decrease of 0.16%; the utilization rate of blast furnace ironmaking capacity was 85.51%, a week-on-week increase of 0.03%; the profitability rate of steel mills was 40.69%, a week-on-week increase of 0.86%; the average daily pig iron output was 2.281 million tons, a week-on-week increase of 0.009 million tons; the daily consumption of imported iron ore by the sample steel mills was 2.819 million tons, a week-on-week increase of 0.005 million tons. Last week, the operating rate of steel mills continued to decline, steel mill profits recovered somewhat, but pig iron production remained stable. Poor downstream finished product transactions led to a decline in steel mills' enthusiasm for production. Although some steel mills may resume production next week, the spot transaction situation is unpredictable, and steel mill profits may decline, negatively impacting the release of steel mill demand. It is expected that the release of iron ore demand may slightly decrease next week.

Regarding scrap steel, prices fluctuated within a narrow range last week. The slight increase in scrap steel prices last week was mainly driven by the overall positive trend in the ferrous metals industry. However, weak demand for finished steel products and downward pressure on finished steel prices led to declining profits for steel mills and reduced production activity. This negatively impacted scrap steel demand, limiting the upward potential of scrap steel prices. Some regions saw price adjustments.  It is expected that the scrap steel market will continue to fluctuate within a narrow range next week.

Market outlook

In summary, SunSirs' data analysts believe that the iron ore market next week will exhibit a pattern of "weak supply and demand, and accumulating inventory." The contraction in shipments and arrivals on the supply side will provide cost support, but the decline in hot metal production and the continued accumulation of port inventories on the demand side will limit upward price movement. With multiple conflicting factors at play and a lack of a single strong driving force, iron ore prices are expected to remain volatile at high levels, with limited upward and downward potential. Attention should be paid to the marginal impact of finished steel price trends on steel mills' production intentions and changes in macroeconomic sentiment.

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