China: Arrivals up 30% MoM, iron ore futures move sideways and consolidate at highs

Iron ore futures shot up then pulled back today, with the most-traded DCE contract I2701 closing at 687.5 yuan/mt, up 0.07% from the previous trading day. Spot prices for mainstream products at Qingdao Port fell by an average of about 3 yuan/mt. Trader activity was moderate, steel mill inquiries were limited, and overall spot transactions were thin.

Supply side, according to SMM statistics, as of Nov. 6, iron ore inventory at 35 major ports nationwide stood at 149.13 million mt, up 1.08 million mt WoW. Port arrivals fell notably this week, yet ports still saw slight inventory buildup. Arrivals are expected to rebound next week, and port inventory may accumulate further.

Demand side, daily average port pick-up volume across the 35 ports fell 55,000 mt WoW to 3.12 million mt. Hot metal production at steel mill blast furnaces pulled back, and port cargo pick-up weakened in tandem. Overall, the rebound momentum driven by bear position liquidation has faded somewhat, and with port inventory buildup pressure persisting, the upside in futures is capped. In the short term, iron ore prices may shift to consolidating at highs, a downgrade from yesterday’s slightly bullish view. Attention should be paid to the pace of port arrivals and steel mill maintenance changes. Source: SMM

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