Port spot transaction volume declines, market trading atmosphere is sluggish
The main iron ore futures contract has fallen all the way since July 16. New lows, and spot prices are also continuing to fall. According to the port, as of August 6, the volume of iron ore entering the port for the week was approximately 1.38 million tons. In terms of inventory, Tianjin Port’s iron ore inventory has been maintained at a level of about 10.4 million tons recently, which is an increase of nearly 20%-25% compared to the inventory of more than 8 million tons in May.
Data shows that the iron ore trade inventories of 45 ports across the country have reached a new high in recent years. Behind the cumulative increase in inventories is the decline in the market's intention to purchase iron ore spot. From the perspective of national port transaction volume, as of last week (August 9th-August 13th), the daily average daily transaction of iron ore spot transactions in main ports across the country was 790,000 tons, a decrease of 29.8% from the previous month. It is understood that with the sharp drop in spot prices, some traders have serious potential losses and are eager to reduce inventories and stop losses in time. However, the current downstream purchasing enthusiasm is low, and the market trading atmosphere is sluggish, resulting in a slowdown in the pace of iron ore procurement and shipments on the trade side.
In the second half of the year, production restrictions and production reduction measures were introduced in many places. Iron ore demand weakened and expected to increase
It is understood that since mid-June, many places have begun to plan and deploy the reduction of steel production in the second half of the year, which has caused the demand for iron ore to continue to weaken. In addition, due to factors such as the weather and the epidemic, the daily crude steel output of steel companies across the country has continued to decline since July, and many steel companies have compressed their raw material inventories in advance. Many people in the industry said that the expected production restrictions have led to a decline in iron ore futures prices and led to a weakening of spot prices. The sharp drop in spot prices has further restrained the demand of downstream companies in the short term. This is also the current round of iron ore. The main reason for the rapid decline in prices. In the short term, the iron ore market will maintain a trend of strong supply and weak demand, and subsequent ore prices will generally weaken and fluctuate.
Steel prices are weakening, short-term prices will maintain a narrow range of fluctuations
Data shows that since the end of July, the current prices of major domestic steel products have continued to weaken. The price of the main thread contract 2201 has been reduced by nearly 1,000 yuan per ton. At the same time, the spot price in East China has dropped from 5400 yuan per ton to around 5150 yuan per ton. In early August, the key statistical iron and steel enterprises produced 2.0439 million tons of crude steel per day, a year-on-year decrease of 4.4%. According to industry insiders, the shrinking volume and price of steel products are related to the recent floods in many areas in the country. The epidemic has repeatedly blocked the start of construction sites and weakened demand. Although the current steel price has declined, it is still in the high range. Judging from the semi-annual reports disclosed by listed steel companies, most companies have good revenues, and many companies have achieved the best performance in history. The current market is in a state of weak balance between supply and demand due to the interaction between output inventory reduction and supply and stable price. It is expected that the short-term steel price will maintain a narrow range of fluctuations, and the steel price will return to a reasonable range in the long run.
Reference source: Internet
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Post time: Aug-24-2021