SunSirs: The Industry's Off-season Continues, and Iron Ore Prices Fluctuated and then Fell in June

Since June, the iron ore market has first fluctuated in a narrow range, and then fluctuated downward, with an overall downward trend. According to the iron ore tracking price of SunSirs, as of the 30th, the Sino-Trade iron ore price index was 723.78, down 3.54% month-on-month. Among them, it reached the lowest point of the month on the 9th at 715.78, with a drop of 4.6%, as shown in the figure above.

Looking back at the iron ore market in June, the iron ore price first fluctuated in a narrow range, and then fell weakly. SunSirs data analysts believe that it can be roughly divided into two stages: the first is a narrow fluctuation. In the first and middle of June, although the off-season effect of the market continued, the profit level of steel mills was good, and the enthusiasm of steel mills to start work was good, which affected the release of iron ore demand, thereby forming a certain support for the ore price, so the ore price showed a narrow fluctuation.

Secondly, the weak downward trend. By mid-to-late June, affected by seasonal weather, the off-season effect of the industry was prominent, the replenishment operation of the downstream building materials market slowed down, the steel transaction volume weakened, and some steel mills began to overhaul operations. The output of molten iron decreased. The fundamentals of iron ore showed a pattern of increased supply and reduced demand. The output of molten iron in June showed a downward trend. In addition, the decline in iron ore futures prices led to a decline in the spot price of iron ore, so the price of ore showed a slight downward trend.

Analysis and forecast of the ore price in July:

In terms of inventory, as of June 27, the inventory of imported iron ore in 45 ports across the country was 139.3023 million tons, an increase of 360,700 tons from the previous week and an increase of 636,500 tons from the previous month; the average daily port clearance volume was 3.2594 million tons, an increase of 123,800 tons from the previous week and a decrease of 0.74 tons from the previous month; the number of ships in the port was 85, an increase of 5 compared with the end of April. The iron ore port inventory situation last week is shown in the figure above; the total inventory of imported iron ore in steel mills nationwide was 88.4747 million tons, a month-on-month increase of 931,400 tons. Since June, as steel mills' blast furnaces have resumed production, the scale of operation has remained at a high level, which has increased the demand for steel mills to pick up goods, so the daily port clearance volume has increased. The good profit situation of steel mills has increased their enthusiasm for operation. The inventory in the steel mills has been continuously consumed, but overseas shipments have been active, and the port inventory has dropped and increased. At this stage, the subsequent market conditions of steel still depend on the transaction of downstream steel products. If the steel market can still maintain the current transaction volume in June, the steel mill's iron ore demand can be expected to release resilience, and the iron ore port inventory may continue to be reduced.

On the supply side, as of June 26, the total global iron ore shipments last week were 35.067 million tons, an increase of 1.54 million tons from the previous month. The total iron ore shipments from 19 ports in Australia and Brazil were 30.098 million tons, an increase of 2.436 million tons from the previous month; Australia's shipments were 21.099 million tons, an increase of 506,000 tons from the previous month; of which Australia's shipments to China were 18.186 million tons, an increase of 215,000 tons from the previous month; Brazil's shipments were 9.51 million tons, an increase of 1.682 million tons from the previous month. In June, due to seasonal factors, overseas shipments recovered to some extent, and overseas shipments were more active. The arrival volume in July is expected to remain at a high level, especially after the weather improves. It is expected that the overall supply situation in July will remain loose.

On the demand side, the overall operation of steel mills' blast furnaces remained stable at a high level in June, mainly because the profits of steel mills were relatively stable at a high level, the production enthusiasm was good, and the molten iron output remained high. In June, due to the limited operation of downstream projects, steel transactions were reduced. In the short term, the profits of steel mills can still support the existing production scale. As the off-season effect of the industry continues to ferment and downstream procurement slows down, steel mills in some regions will increase maintenance plans, which will lead to a reduction in molten iron production. However, the specific increase depends on the profits of steel mills and the transaction of downstream steel products. Iron ore demand may decrease slightly in early July.

In terms of scrap steel, since June, the price of scrap steel has risen first and then stabilized, and has stabilized. In June, it was mainly due to the weakening of the overall market of the black series, which affected the change of scrap steel prices; since June, the profit situation of steel mills has improved, the scale of steel mills has been running at a high level, and blast furnaces have been resuming production. After the price of iron ore fell, steel mills are more inclined to iron ore raw materials. In addition, the negative factors of the fundamentals during June had a greater impact, which was negative for the scrap steel market. It is expected that the scrap steel market may fluctuate in a narrow range in July.

In summary, the data analysts of SunSirs believe that on the demand side in June, steel mills had good profits, blast furnaces were operating well, and molten iron production was running at a high level. In July, many steel mills had equipment maintenance, which was bearish for demand. On the supply side, due to seasonal factors in June, overseas shipments resumed, and overall port inventories fell and increased. Overseas shipments were good in July, and supply was generally strong. The steel market was in the off-season in July, and steel mills are expected to overhaul their equipment, which is bearish for the destocking process of port inventories. Overall, the fundamentals of iron ore supply and demand in July may turn to a situation of increasing supply and decreasing demand. On the whole, steel mills have good profits at this stage, and the demand for iron ore is still resilient. It is expected that iron ore may rise first and then fall in early July, and it will fluctuate in a weaker direction.

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