Business Community: Supply and demand increase, iron ore prices may first fall and then rise.

On March 1st, a report from the Business Community stated that since February, the iron ore market has been fluctuating at high levels, experiencing a rise and fall after the holiday, and showing an overall weak trend. According to the Business Community commodity price analysis system, as of the 29th, the price of iron ore was 926.56 yuan per wet ton, a 9.29% decrease compared to the previous period. Looking back at the iron ore market in February, it can roughly be divided into two phases: initially, there was fluctuation at high levels in the first half of February, as steel mills slowed down their purchasing operations after completing winter storage replenishment, due to low profits and reduced demand causing a decrease in market trading, which led to weak sentiment in the futures market and iron ore prices fluctuating. In the second phase, there was a rise and fall phenomenon. After the Spring Festival holiday, speculators were optimistic about the post-holiday expectation of steel mills resuming production, so the futures market temporarily surged after the holiday. However, due to stable profit situations in steel mills and no significant increase in demand, the actual resumption of production did not meet market expectations. Coupled with bearish macroeconomic factors, iron ore prices began to accelerate downward. What will be the trend of iron ore prices in March? Inventory: As of the 23rd, the imported iron ore inventory at 45 ports nationwide was 136.03 million tons, an increase of 4.55 million tons compared to the previous period. The daily average port clearance volume was 2.6965 million tons, a decrease of 0.3383 million tons compared to the previous week. There were 151 ships in port, an increase of 7 ships from the previous week. Due to the impact of the Spring Festival holiday, steel mills reduced their procurement operations, mainly using their own stocks during the holiday season. However, overseas shipping has continued, leading to a concentrated accumulation of port inventories. A decrease in inventory levels is expected only after steel mills fully resume production. But with steel mills currently operating at low profits, their enthusiasm for production is low, so port inventories are expected to remain in a state of accumulation. Supply: As of the 26th, the total global iron ore shipments last week were 26.037 million tons, a decrease of 4.429 million tons compared to the previous week. Shipments from Australia and Brazil's 19 ports totaled 20.785 million tons, a decrease of 3.977 million tons, of which 10.33 million tons were sent from Australia to China, a decrease of 5.285 million tons. This week, overseas shipments have significantly decreased due to weather conditions, and as a result, shipments arriving in March will also decrease. However, with steel mills currently operating at low profits and not expected to significantly expand their production scale, along with high levels of port inventories, the supply in March is expected to remain loose. Demand: In February, the blast furnace operation of steel mills remained stable. Due to the holiday, molten iron production decreased slightly, but it has been maintained at a certain level to ensure supply. Currently, steel mills are operating at low profit levels. Meanwhile, downstream steel transactions have not improved, so the probability of steel mills expanding production further is small. Looking at the growth in molten iron production last year, there will be some growth after the holiday, which is positive for demand release. However, the specific increase will depend on the profit situation of steel mills and the transactions of downstream steel mills. Scrap steel: Since February, the scrap steel market has been fluctuating weakly. This month, there have been some price adjustments in certain regions due to fluctuations in the black market. Currently, steel mills are operating at low profit levels mainly due to high raw material costs, such as high ore prices, which will stimulate the demand for electric furnace steel production to some extent. Although a slight decrease in ore prices may affect the demand for scrap steel, if steel mills expand their production, it will also be positive for the demand for scrap steel. With steel mills expected to fully recover in March, the scrap steel market may see a slight increase in prices, depending on downstream steel transactions and whether steel mill profits improve. In conclusion, data analysts from the Business Community believe that the basic recovery of steel mills on the demand side will favor the release of iron ore demand. However, due to profit issues, the scale of operations will be limited, so the demand in March will gradually release, but the specific magnitude is difficult to predict. On the supply side, periodic reductions in overseas shipments due to weather conditions are expected, but port inventories are still in a state of accumulation. If steel mills maintain their current scale of operations after resumption of work, the overall supply will remain loose, and the fundamentals of iron ore in March may turn into a situation of dual growth in supply and demand. In summary, with iron ore port inventories still accumulating, and the slight release of restocking demand after steel mills resume work, iron ore prices in March are expected to fall first and then rise, showing a trend of strong fluctuations.