SunSirs: Some Steel Mills are Expected to Resume Production After Maintenance This Week

According to the SunSirs Commodity Market Analysis System, iron ore prices rose before falling last week, fluctuating within a narrow range. This initial rise and subsequent decline, along with the narrow range of fluctuations, was primarily due to positive macroeconomic news at the beginning of the week that boosted market sentiment, coupled with favorable supply and demand factors for ore prices. As the positive news faded towards the weekend, speculative sentiment cooled. Coupled with weak downstream steel trading, steel mill profits shrank as pig iron production recovered, negatively impacting ore prices. Consequently, iron ore prices rose before falling last week, fluctuating within a narrow range.

Forecast for this week's ore price trends:

As of August 15, imported iron ore inventories at 45 ports nationwide stood at 138.1927 million tons, a month-on-month increase of 1.07 million tons. The average daily port throughput was 3.3467 million tons, a week-on-week increase of 128,200 tons. The number of vessels in port was 93, a week-on-week decrease of 12. The chart above shows the port inventory situation for last week. Total imported iron ore inventories at steel mills nationwide reached 91.364 million tons, a weekly increase of 1.2306 million tons. Last week's increase in hot metal production indicates increased demand from steel mills for delivery, leading to an increase in port throughput. Overseas shipments increased last week. Although steel mill profits declined, active production remained strong, leading to high port throughput. Port inventories may decline this week, so we remain closely monitoring changes in port iron ore inventories.

On the supply side, as of August 11, global iron ore shipments totaled 30.467 million tons, a decrease of 151,000 tons from the previous week. Total iron ore shipments from Australia and Brazil reached 25.303 million tons, a decrease of 19,000 tons from the previous week. Australian shipments totaled 16.625 million tons, a decrease of 1.177 million tons from the previous week. Of this, Australian shipments to China reached 14.478 million tons, a decrease of 996,000 tons from the previous week. Brazilian shipments totaled 8.678 million tons, a month-on-month increase of 1.158 million tons. Last week, shipments from Australia decreased slightly, while shipments from Brazil increased slightly. The cyclical nature of overseas shipments from Australia and Brazil is primarily influenced by season and weather, leading to short-term fluctuations in shipments. In the medium and long term, the loose iron ore supply remains unchanged. Iron ore prices have remained supportive recently, and merchants are willing to ship. Iron ore shipments may increase this week, and iron ore supply is expected to recover.

On the demand side, as of August 15, the blast furnace operating rate at steel mills was 83.59%, a 0.16% decrease from the previous week. Blast furnace ironmaking capacity utilization was 90.22%, a 0.13% increase from the previous week. Steel mill profitability was 65.8%, a 2.6% decrease from the previous week. Average daily hot metal output was 2.4066 million tons, an increase of 3,400 tons from the previous week. The current daily consumption of imported ore by the sampled steel mills was 2.9852 million tons, a 3,700-ton increase from the previous week. Last week, steel mill production remained high. Despite increased profits, manufacturers maintained strong operating enthusiasm. This week, some steel mills are expected to resume production after maintenance, leading to a slight increase in iron ore demand.

Regarding scrap steel, scrap prices rose before falling, fluctuating within a narrow range. This week, scrap prices fluctuated, primarily influenced by overall market conditions. Steel mills have recently experienced strong profits and strong operating enthusiasm. News of production restrictions has also driven scrap prices higher in some regions, positively impacting demand. Scrap prices in some regions have adjusted somewhat, and the scrap market is expected to remain stable next week.

In summary, data analysts at SunSirs believe that on the demand side, steel mills are showing healthy profits and are actively reviving production, primarily due to subpar terminal operations. With some blast furnaces resuming production next week, steel mill demand is expected to recover slightly in the short term, leading to strong speculative trading among traders. On the supply side, cyclical fluctuations in overseas shipments this week have led to a slight buildup in port inventories. With overseas shipments resuming next week, supply will continue to grow, potentially shifting the iron ore supply and demand fundamentals towards a dual-growth scenario. Currently, frequent high temperatures have significantly limited downstream terminal operations. This week's rebound in iron ore prices is primarily driven by macroeconomic factors and news sentiment. There is a possibility of an accumulation of iron ore port inventories next week. In the short term, market sentiment is bullish on iron ore, with speculation prevalent. We anticipate that iron ore prices will initially rise before falling, with a period of strong volatility. Later in the week, attention should be paid to steel mill profits and actual demand from downstream finished products suppliers.

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