Last week. The black futures price was pre-suppressed, and the raw iron ore and coke competed. The main contract of iron ore was affected by the news of the revised standard of the company, and it stabilized and rebounded after the deep correction. As of July 26, the iron ore I1909 contract price closed at 892 yuan / ton, a weekly decline of 2.62%. Looking forward to the market outlook, Hebei Tangshan recently reaffirmed strict implementation of steel production restrictions. After the rainy season in the south, it will meet high temperatures. Steel inventories will increase for 7 consecutive weeks. Terminal demand will continue to be suppressed. The Ministry of Ecology and Environment requires ultra-low emission A-class enterprises to stop this winter. Limited production, the demand side increase is difficult to release in the short term, but in the medium term, as the terminal demand gradually rises and the production limit is reduced, the downstream demand is still expected to increase. At the current stage, the supply and demand of iron ore still maintains a tense pattern, but the contradiction between supply and demand is gradually improving, and the suppression of iron ore prices will gradually appear in the recovery of supply-side mines and normal shipments. At the same time, the decline in the inventory of imported iron ore ports has gradually reversed, and iron ore futures continue to be highly apportioned, providing some support for the near-monthly disk.

Brand delivery system affects new contracts

On July 24th, the Grand Chamber of Commerce issued the “Letter for Soliciting Opinions on Implementing the Brand Delivery System for Iron Ore Futures”, which relaxed the iron ore index requirements and reduced the cost of stacking and quality inspection on the basis of confirming the delivery brand. Good delivery will be adjusted from the current standard Roy Mountain powder, PB powder to Caragas powder, etc. If the new standard is implemented on the new contract, it will have less impact on the current listed contract.

Iron ore production is gradually recovering

The decline in port inventory has reversed

On July 22, Vale released its second-quarter production report for the second quarter of 2019: iron ore production in the second quarter totaled 64.06 million tons, down 12% from the previous month and down 34% from the previous year. Iron ore production in the first half was 137 million tons. In the second quarter, the total sales volume of Vale iron ore and pellets was 70.79 million tons, up 4.5% from the previous month and down 18.2% year-on-year. The total sales volume in the first half of the year was 139 million tons, down 18.9% year-on-year. As for port inventory, as of the week of July 26, the iron ore stocks of 45 ports nationwide were 1,16,418,100 tons, down by 420,800 tons. On the whole, the modification of the delivery standard has little effect on the current contract. The initial recovery of the iron ore supply is relatively certain. The supply of iron ore in Australia has returned to normal. The supply of Brazil is recovering. The demand side is temporarily stable. Certainty, the downward trend of imported iron ore port inventory has reversed, but it is still at an absolute low level. The supply and demand tension pattern has improved expectations, but it is not appropriate to over-sell in the short-term. There is still room for repair in the near-month basis, and the market is expected to be repeated.