The ferrous market underwent adjustments due to macroeconomic data falling short of expectations today. However, iron ore strengthened in the afternoon session due to market talks. Overall, the destocking of steel products has shown good progress. The current low inventory levels, together with a slight reduction of output in winter, are positive for steel mill profits. Current prices of rebar and HRC are at recent-year lows, making them prone to rebound with any policy stimulus.
For iron ore, there were market talks today of heavy rain hitting BHP's South Flank mine in Western Australia, briefly causing market strength. However, our channel checks suggested that BHP's operations were not affected by the rain. Short-term rainfall won’t significantly impact long-term mining operations.
The iron ore futures market maintained volatile trading today. After a small rise at the morning opening, prices fell sharply due to deviations in November's macroeconomic data from expectations. In the afternoon, market sentiment stabilized, and prices recovered with the help of market talks. Overall, iron ore remains in an upward channel, with strong support expected around the Rmb790/ton level in the short term.
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