Influential Factor analysis
From the perspective of inventory: As of February 21, the inventory of 45 ports across the country was 1,23,823,200 tons, which was 747,300 tons week-on-month, and the inventory level was almost the same as before the Spring Festival. The overall performance was that supply pressure was acceptable, which caused a slight drag on prices. On the other hand, the inventory levels of trading mines and Brazilian mines have remained basically stable, but Australian mines have clearly rebounded by more than 1 million to 2 million tons compared with before the Spring Festival. On the one hand, the impact of the Australian fire and hurricane has gradually dissipated, and the amount of reissued mines has increased; On the other hand, the price of imported ore is rising rapidly, the market premium is too high, and the actual purchase demand of steel mills is biased towards other imported ore brands (Newman flour and Newman block have a better deal). On the whole, from the perspective of inventory, the stock of imported ore has risen and fallen after the Spring Festival, and there has been no significant increase or decrease, which has a small impact on the price of ore.
From the demand side: As of February 21, the operating rate of blast furnaces in 247 steel plants nationwide was 71.43%, a week-on-month decrease of 1.51% and a year-on-year increase of 6.16%; the utilization rate of blast furnace ironmaking capacity was 73.93%, a week-on-month decrease of 0.77%, a year-on-year decrease Down 5.14%; the average daily hot metal production was 20.671 million tons, down 21,500 tons week-on-month, and down 143,800 tons year-on-year. Both hit their second lowest level since 2019. Although the operating rate of steel mills has decreased, it is mainly due to the increase in pressure on the accumulation of finished product inventory and the initiative to reduce production and limit production. However, with the consumption of imported ore inventory and the recovery of ore prices, the purchase demand of steel mills has begun to recover.
As of February 13, the average inventory of imported ore in steel mills in the current period was 28 days, a sharp drop of 14 days compared to the Spring Festival; and the total inventory of imported sintered powder fell to 16.342 million tons, a sharp drop of more than 6 million tons compared to the Spring Festival; The average total inventory of imported ore dropped to 312,200 tons, which was a significant drop of 74,100 tons compared with that before the Spring Festival. Therefore, it shows that the current demand for imported ore in steel mills has basically recovered.
Therefore, from the perspective of demand, although steel mills continue to reduce production and maintenance, on the other hand, under the mentality of buying up or not buying, and the return of raw material inventory to normal levels, the demand for replenishment will gradually increase. In addition, the terminal manufacturing industry and the construction site have accelerated the resumption of work, and the consumption of finished materials inventory will also increase. Then the operating rate will also rise, and the demand for ore will increase again, pushing up the price of ore.
From the perspective of futures: The main iron ore contract only started to maintain stability after a big drop in the first 2 days after the Spring Festival, and it continued to rebound for 10 consecutive days, and the price rebounded to the level before the Spring Festival. This led to a sharp rise in spot prices. Although from the current stochastic indicator KDJ, there has been a peak market; but from the long-term indicator MACD and the moving average, there is still room for upside. From the spot K-line chart, there is short-term downward pressure. Therefore, from a technical analysis, the next cycle of cargo and ore prices may enter a short-term correction period, there is a downside risk.
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