As of October 16, new data shows that iron ore inventory at 35 major ports in China has reached 148.3 million tons. This figure represents an increase of 2.85 million tons compared to last month and indicates an upward trend in overall inventory. At the same time, the average daily withdrawal from the ports has decreased by 50,000 tons to 3.185 million tons.
Declining Demand and Its Effects on Port Inventory
Although the new arrivals of iron ore at the ports have slightly decreased in recent weeks, the performance of demand from steel producers has been even weaker. Hot metal production in steel furnaces has significantly declined, leading to a reduced demand for iron ore concentrates. This situation has further decreased withdrawals from the ports. With the decrease in arrivals and withdrawals, port inventories are generally on the rise.
Future Outlook and Existing Challenges
Looking ahead to next week, it is expected that iron ore arrivals at the ports will increase, and hot metal production in steel furnaces may improve slightly. However, the profitability of steel mills is currently facing significant losses, and supply strategies are largely need-driven with limited inclination to stockpile. Therefore, the increase in withdrawals from the ports will mainly be constrained.
As a result, even if demand improves marginally, the overall supply and demand situation will remain loose, and port inventories are likely to continue to rise. Overall, the fundamentals of iron ore remain weak in the short term, and the pressure on port inventories will not ease soon. Attention to the improvement of steel mill profitability, the sustainability of hot metal production, and changes in the pace of arrivals at the ports is crucial.
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