SMM

Last week, iron ore prices continued to plummet, hitting a new low for the year. Supply and demand side, according to SMM shipping data, global iron ore shipments fell sharply by 12.2% WoW, reaching a seasonal low; meanwhile, iron ore arrivals also decreased. Demand side, daily average output of pig iron from steel mills' blast furnaces slightly increased by 400 mt, keeping iron ore demand stable. Port inventories continued to increase, but the growth rate narrowed, slightly improving the fundamentals of iron ore. However, both domestic and international PMI data fell short of market expectations last week, leading to a pessimistic outlook on future end-user demand. Additionally, the U.S. ADP employment increased by 99,000 in August, the lowest since early 2021, heightening market concerns about an economic recession. Overall, macro factors had a greater impact on the iron ore market last week than fundamentals, and driven by pessimism, iron ore prices continued to decline sharply. Specifically, spot PB fines prices at Shandong ports fell by 43 yuan/mt WoW.
Looking ahead to this week, low iron ore prices are expected to suppress some non-mainstream shipments, making it difficult for global shipments and arrivals to increase. However, recent improvements in steel mill profits and accelerated blast furnace restarts, coupled with pre-Mid-Autumn Festival restocking, are expected to boost iron ore demand, further improving fundamentals. Nevertheless, considering the heightened market concerns about an economic recession, the market sentiment remains sluggish, and the apparent demand for steel is weak. Therefore, in the short term, iron ore prices are unlikely to see a significant rebound and may continue to fluctuate downward.