Price trend

According to the commodity market analysis system of SunSirs, iron ore prices trended upward with some volatility last week (April 18–25; hereafter, the same period applies), exhibiting a strengthening trajectory. As of the 25th, the SunSirs Iron Ore Price Index stood at 791.89 points, marking a month-on-month increase of 0.39%, as illustrated in the chart above. Last week, the iron ore market displayed a volatile yet generally firm trend, with industry-specific fundamentals serving as the primary drivers of market dynamics. Market sentiment was bolstered by expectations of pre-holiday inventory restocking, coupled with policy-related news regarding "supply-side reform" and "anti-overcapacity" initiatives; notably, a breakout in hot-rolled coil prices—surpassing previous highs—helped propel iron ore prices toward the upper boundary of their trading range. However, steel mills continued to limit their purchasing primarily to immediate, essential requirements, and no concentrated inventory restocking was observed; consequently, the spot market demonstrated limited momentum in tracking these price gains. Moving forward, market participants should closely monitor whether the key meetings scheduled for the end of the month will introduce detailed measures regarding supply-side reform within the steel industry or specific plans for achieving "carbon peaking." Should finished steel products fail to sustain their upward breakout, the underlying momentum driving the iron ore rebound is expected to subsequently wane.

Market analysis

Regarding inventory, as of April 24, the total inventory of imported iron ore across 45 ports nationwide stood at 169.8045 million tons, a decrease of 805,000 tons from the previous period. The daily average port throughput (outbound volume) was 3.1462 million tons, an increase of 26,300 tons week-on-week; the number of vessels currently at port totaled 106, an increase of 2 vessels week-on-week. The status of iron ore port inventories for the past week is illustrated in the figure above; the aggregate inventory of imported iron ore held by steel mills nationwide amounted to 88.8407 million tons, a decrease of 483,000 tons week-on-week. Last week saw an upward trend in steel mill profit margins; coupled with high levels of hot metal production and the release of restocking demand ahead of the holiday, port throughput maintained its growth trajectory. Port inventories continued to undergo destocking last week, and this trend is expected to persist into the coming week; consequently, close attention should continue to be paid to changes in port-side iron ore inventory levels over the next week.

On the supply side, as of April 20, the total global iron ore shipments for the past week amounted to 30.739 million tons—a week-on-week decrease of 1.123 million tons. Total shipments from Australia and Brazil stood at 25.36 million tons, down 1.454 million tons from the previous week. Australian shipments totaled 18.363 million tons—an increase of 785,000 tons week-on-week—of which 14.653 million tons were destined for China, representing a decrease of 218,000 tons. Brazilian shipments totaled 6.997 million tons, down 669,000 tons week-on-week. This week saw a decline in shipments from both Australia and Brazil. Cyclical fluctuations in overseas shipments from Australia and Brazil are primarily influenced by seasonal factors and weather conditions; while short-term shipment volumes may vary, the medium-to-long-term outlook for iron ore supply remains one of relative abundance. With restocking demand having been released ahead of the holiday period and overseas suppliers demonstrating active shipping behavior, iron ore shipments are expected to continue their rebound next week, though arrivals at ports may see a slight decline; overall, the iron ore supply landscape continues to trend toward a strengthening position.

Regarding demand, as of April 24, the operating rate of steel mills' blast furnaces stood at 83.05%, a week-on-week decrease of 0.15%; the capacity utilization rate for blast furnace ironmaking was 89.72%, down 0.06% from the previous week; the profitability rate among steel mills reached 49.78%, an increase of 2.16% week-on-week; the average daily output of molten iron was 2.3932 million tons, a decrease of 1,800 tons from the previous week; and the current daily consumption of imported iron ore among the sampled steel mills was 2.9583 million tons, down 4,600 tons week-on-week. This week, steel mill operating rates remained at high levels, and molten iron output saw a slight decline, yet steel mill profitability trended upward. Next week marks the final week preceding the "May Day" holiday; consequently, the release of steel mills' restocking demand is expected to slow down somewhat, while the overall demand for iron ore is projected to see a modest increase.

Regarding scrap steel, the market experienced narrow fluctuations last week, with distinct regional divergence. The absolute price—as measured by the MySSpic Scrap Steel Index—closed at 2,477.62 RMB/ton, marking a marginal week-on-week increase of 0.06%; this gain was significantly weaker than that of iron ore. On the supply side, overall resources remained tight; the recovery in scrap generation was sluggish, and this was compounded by intensifying issues regarding the shortage of tax invoices, leading to temporary supply gaps in certain localized areas. On the demand side, daily consumption saw a slight uptick; however, with average profits for independent electric arc furnace (EAF) mills standing at -44 RMB/ton, persistent financial losses continued to constrain any potential growth in scrap steel demand. In terms of inventory, stocks held by a sample of 300 steel mills reversed their upward trend and began to decline, as some mills with low inventory levels demonstrated an inclination to restock ahead of the "May Day" holiday. Looking ahead, bullish and bearish factors remain intertwined; consequently, scrap steel prices next week are expected to maintain their current pattern of overall narrow fluctuations, with only marginal, temporary upticks observed in specific localized markets. Bullish factors include expectations of pre-holiday restocking, tight supply conditions, and marginal improvements stemming from a narrowing price spread between iron ore and scrap steel. Conversely, bearish factors include the continued financial losses faced by EAF mills, a relatively low price spread between rebar and scrap steel, and lingering uncertainties regarding the actual realization of demand for finished steel products. The interplay between restocking expectations and the actual intensity of purchasing activity will be the key determinant; given the lack of a strong, unidirectional market driver in the short term, it is advisable for market participants to prioritize inventory risk management rather than aggressively chasing price rallies.

Market Outlook

In summary, analysts at SunSirs believe that the coming week marks the final full trading week preceding the "May Day" holiday. The market currently stands at a delicate and critical juncture: on one hand, expectations regarding pre-holiday inventory replenishment have not yet been entirely refuted; should a surge in restocking coincide with a drawdown of port inventories, prices retain the potential to trend upward. On the other hand, "on-demand" purchasing has become the norm, making it highly probable that the restocking efforts of steel mills will fall short of expectations; consequently, the sentiment-driven premium that had previously accumulated in the market may gradually dissipate. Prior to the holiday, iron ore prices are highly likely to maintain a range-bound, oscillating trend—constrained on the upside by a rebound in mine shipments and cooling policy expectations, yet supported on the downside by robust underlying demand from high blast furnace utilization rates. With limited scope for the price center to shift significantly, the market's primary focus now centers on whether key meetings scheduled for late April—immediately following the holiday—will yield substantive policy signals regarding "anti-internal competition" measures and supply-side structural reform within the steel industry.

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