Iron Ore Prices Will Encounter Pressures from Weakening Demand – SMM – Shanghai Metals Market
SHANGHAI, Jan 27 (SMM) – Supply: The mining blocks in Brazil have resumed the production from the heavy rains, and overseas shipments will gradually return to normal in the future. In addition, the current port inventory is still at a high level of 150 million mt, hence the overall supply in the first quarter will remain sufficient.
Demand: As the Winter Olympics are approaching, the production of steel mills in north China will be restricted since January 31. Meanwhile, as the probability of heavy air pollution in north China is high during the Winter Olympics, temporary control could be expected. It is expected that the environmental protection requirements and production restrictions in Beijing, Tianjin and Hebei and surrounding areas will be more stringent during the Winter Olympics, and the output of pig iron will drop significantly and stand at 2.1 million mt in February.
Iron ore prices will hence pull back amid sluggish demand in the first week post the CNY holiday. And the prices will remain flat over the pre-holiday level. After the Lantern Festival, the steel mills in east China and south China will basically exhaust the stocks built ahead of the holiday, and the demand will increase slowly. The steel mills in the northern region will resume the production intensively in early March after the Winter Olympics, which is expected to provide strong support for iron ore prices. To sum up, SMM believes that the iron ore prices will fluctuate between 115-140 yuan/mt throughout the entire first quarter.
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