Today**: Iron ore fell significantly, as of the afternoon, 05 contract iron ore **5% to 911 yuan per ton. The 5-9 price spread widened slightly to 67 yuan per ton.
Driver 1: Steel mills have ultra-seasonal production cuts, and inventories are expected to rise year-on-year
The seasonal production reduction of steel mills is larger. Molten iron production fell from 2.4 million tonnes to 2.2 million tonnes and remains at a low level of 2.24 million tonnes. Due to the large production reduction of steel mills, iron ore inventories have risen from low levels. As of the 18th, the iron ore inventory of steel mills was 95.68 million tons, although the inventory was larger than the previous month, but the inventory increased year-on-year. The iron ore inventories in 45 ports and 47 ports were 136.76 million tons and 142.12 million tons, up 5.45 million tons and 5.11 million tons month-on-month, close to the level of the same period in 23.
At present, the global iron ore shipment is flat year-on-year, and the interference is not obvious. In the shipment of iron ore, the shipment from Brazil and the non-mainstream shipment is high, while the shipment from Australia is low. Among them, India's shipments remain high, and India's shipments are expected to increase from year-on-year flat to year-on-year in 24.
Driver 2: Weakening macro demand may affect the downward shift of steel production in 24 years
In 23 years, the average daily output of molten iron in steel mills is at the level of 2.4 million tons, and the valuation of iron ore of about 1,000 yuan is high, and the demand expectation of 2.4 million tons of molten iron has been priced. However, during the Spring Festival, overseas inflation data rose again, and interest rate cut expectations were delayed; After the domestic real estate policy of restricting purchases and loans, the real estate sales data is still weak, and the suspension of infrastructure in some provinces has also affected the expected decline in the demand for steel consumption in the infrastructure industry. In the case of weakening demand expectations, the output center of steel mills will be reassessed.
Since the fourth quarter of 23, the rise in scrap inventories and daily consumption has affected the expectation that the daily consumption of scrap steel in 24 years will be repaired at a low level, and the growth of daily scrap consumption will form a certain replacement for molten iron, and will also squeeze the demand for iron ore.
Outlook for the future:
Iron ore supply is stable and demand is weak, and inventories are flat year-on-year, but valuations are high. Although steel mills are expected to resume production in the later stage, the valuation has been high, and under the influence of the inventory recovery to the same level year-on-year, the increase in shipments in India and the low level of hot metal, the inventory may move towards a year-on-year upward pattern. Superimposed on the weakening of steel demand, iron ore ** is expected to weaken. The risk is that the iron ore ** has a large discount. Operationally, in early February, it is recommended that 05 iron ore be shorted in the range of 950-1000 yuan, and short orders can continue to be held, with a target range of 850-800 yuan.