The ferrous market fluctuated today, initially declining and then recovering, disrupted by the output cuts from maintenance checks. Recently, news are widespread about China mills’ maintenance checks which cause output cuts, pressuring iron ore but steel products recovering. Overall spot steel products transactions remain generally weak. We expect in the short term market disturbances are from policy expectations and winter restocking of iron ore.
Today, iron ore spot prices at ports mirrored the market’s fluctuations, closing with an overall drop of Rmb5-10/ton. The price divergence among different products continued. With reductions in Rio Tinto’s PB fines and increases in SP10 fines, together with the impact of winter restocking, we expect medium-grade prices are expected to remain strong, while low-grade prices may weaken in the near term.
The iron ore futures market was weak and declined today. Several regions reported environmental production cuts, leading to an expected sharp drop of pig iron output. Combined with traders realizing profits before the year-end, this has put short-term pressure on iron ore prices. In the short term, watch out iron ore filling the Rmb792/ton gap before resuming an upward trend.
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