Boosted by macro expectations, iron ore futures maintain resilience amid short-term corrections

As a practitioner in the field of pipeline systems, Haihao Group brings you the latest information on raw material price changes.In the period from November 13th to 17th, the black commodity futures market exhibited a noticeable upward trend, supported by expectations of macro-level improvements. After a week of trading, iron ore futures prices experienced a significant but short-lived pullback, with the main contract price retracing approximately 1% by the end of last weekend. Given the sustained support from macro-level expectations, it can be inferred that the pullback in iron ore futures prices is short-term and represents a phase of oscillation at higher levels.

HAIHAO GROUP

Fundamental Dynamics: A Landscape of Dual Weakness in Supply and Demand

On the supply side, iron ore is currently facing a dual weak pattern in both shipment volume and arrival volume due to the impact of the recent Brazilian fire incident and adverse weather conditions domestically. Last week, the total arrival volume of iron ore at 45 ports nationwide was 20.52 million tons, marking a 20.9% week-on-week decline of 5.42 million tons and reaching a near three-year low. Additionally, the global iron ore shipment volume saw a week-on-week decrease of 4.47 million tons, lower than the October weekly average by 4.26 million tons, hitting a near three-year low and falling below the yearly average.

From the demand perspective, the daily average iron production of 247 steel mills nationwide continued to decrease, standing at 2.355 million tons. This figure represents a week-on-week decrease of nearly 33,000 tons but a year-on-year increase of 106,000 tons. As steel production is currently in a seasonal downturn, the demand side is expected to remain relatively weak in the short term.

Inventory Dynamics: Brief Destocking Amid Low Absolute Iron Ore Stock Levels

Despite a marginal destocking observed in the short term, iron ore inventory remains at a low absolute level. As of November 17th, the total inventory of iron ore at 45 ports nationwide was 112.269 million tons, showing a week-on-week destocking of 817,000 tons and a decrease of 20.921 million tons compared to the same period last year. However, this modest destocking observed last week is deemed unsustainable. With the waning influence of weather factors, port unloading and inbound inventory are expected to rebound this week. It is anticipated that the iron ore inventory at 45 ports nationwide will re-enter an accumulation phase in the later part of the month.

In summary, while macro-level support persists, the dual weaknesses in supply and demand fundamentals contribute to short-term corrections in iron ore futures prices. The market is expected to navigate these fluctuations, maintaining resilience as it balances macroeconomic factors with the intricacies of the iron ore supply and demand landscape.