The single-day decline was close to 7%, and the lowest fell to around 720 yuan/ton. The price of high-grade mineral powder in the spot market fell sharply, and the price of incoming card powder fell to around 1100 yuan/ton...the iron with the strongest gains in the first half of this year After entering the second half of the year, the price of ore continued to fall, and has now hit a new low in the past 14 months.

The sluggish performance of iron ore prices is mainly due to the steady progress in the reduction of crude steel output in the domestic steel industry. The shrinking of the steel supply side has effectively blocked the iron ore demand space, and the iron ore futures market is bearish. The spot market also started a "high diving" market, squeezing the "price bubble" that caused the irrational rise in iron ore prices in the first half of this year.

So, will the "falling" iron ore "slow down" the rise of steel prices in the peak season? In the author's view, it will not be in the short term. In the long run, it still depends on the room for continuous correction of iron ore prices.

First of all, the supply-demand game under the current peak season market restriction expectations is the main line driven by the market, and cost factors play a more important role. In particular, we should pay attention to the fact that the price of "double coke" (coke, coking coal) has started the 10th round of increase after the succession of iron ore has become the new strong species of black series in the second half of the year, with an increase of 200 yuan/ton. The rate of increase in the price of "double coke" is actually higher than the rate of iron ore price correction. Therefore, the steel cost platform does not have the conditions for a deep downward shift in the short term, and the impact of iron ore price correction on steel prices is relatively limited.

Secondly, in terms of absolute prices, although the current iron ore price has fallen significantly, it is still at a relatively high level in fact, and there is no oversold situation. The latest statistics from the General Administration of Customs show that the average price of imported iron ore in August was US$207.59/ton, and the average price of iron ore imports in the first eight months of this year was US$178.25/ton. This shows that although the price of iron ore has been adjusted weakly, the absolute price is still at a relatively high level. Taking the Platts 62% grade iron ore index as an example, the price as of September 10 was US$128.8/ton, which is still far behind the lowest point of US$79.8/ton in 2020. Therefore, the supporting role of iron ore on the steel cost platform has not been broken due to the market correction.

From the current point of view, it is difficult for iron ore prices to "drag" the upward trend of steel prices for the time being, and the impact of iron ore price trends on steel prices will be quickly digested by the market. In addition, in the face of continuous new highs in the price of "bifocal", the relevant state departments have taken measures to control them. In the later stage, once the price of "double coke" hits an inflection point and resonates with the price of iron ore, the market will really face the test of falling costs. It is not ruled out that steel prices may fall from a high level. In the context of "slimming" production by steel companies, the demand for iron ore has fallen sharply, and the price of iron ore will fall mainly due to shocks, and it will continue to return to the reasonable price area in the future.