As the national steel industry continues to reduce production, iron ore prices continue to drop. As of the close of the domestic futures market on the afternoon of September 7, the main iron ore contract hit an intraday low of 718.5 yuan/ton, a record low since May 2020. Since September this year, iron ore futures have fallen by more than 8%.
At the same time, the backlog of imported iron ore inventories has become more apparent. Data show that as of last week, the domestic iron ore port inventory was 13,100 tons, an increase for four consecutive weeks, and the inventory hit a new high in more than four months. Analyst Xu Cuiyun said that under the guidance of the policy of ensuring production cuts and stabilizing prices and guaranteeing supply, the purchase demand of steel mills was relatively sluggish, coupled with the increase in iron ore arrivals from the previous month, port transactions were not good.
Behind the sharp drop in iron ore prices and the backlog of inventories is the sharp drop in demand caused by production restrictions in the steel industry. As the domestic steel industry's production reduction has entered a critical period, various localities have successively increased production restrictions and production reduction measures, and strive to reduce crude steel output in 2021 year- on-year.