The Impact of Overseas Fund Outflow and Easing Sentiment on Iron Ore Futures

Iron Ore Futures Experience a Significant Drop

The DCE iron ore futures witnessed a notable 3.17% decline on Friday, influenced by the performance of the stock market and an outflow of overseas funds. This outflow has had a direct impact on investor confidence in the domestic financial market, resulting in an easing of macroeconomic sentiment. As a result, the main contract closed at 839, marking a significant downturn.

Steel Mills Continue to Purchase Actively

Despite the drop in iron ore futures, steel mills are actively purchasing the commodity. PBF deals at Shandong and Tangshan ports were priced at 910 yuan/mt and 935-945 yuan/mt respectively, indicating a sustained demand for iron ore.

Inventory Levels Decline

However, inventory levels have been consistently declining. SMM tracking data revealed a decrease of 550,000 tons across 35 ports, bringing the total to 105.01 million tons. This represents a year-on-year decrease of 211.7 million tons, marking the sixth consecutive period of decline.

Reduced Molten Iron Production Impacts Profits

Contributing to this trend is the reduction in molten iron production at steel plants, which has resulted in poor profits for some finished product varieties. Furthermore, the daily average port clearance volume of imported mines fell by 124,000 tons this week, leading to a significant decline in port dredging volume.

Potential Turning Point for Iron Ore Prices

The continuous decrease in inventory could potentially signal a turning point that may put short-term iron ore prices under pressure. As the reduction in inventory continues, market participants will closely monitor these developments.

This article provides insights into the significant drop in DCE iron ore futures, influenced by overseas fund outflow and easing sentiment. Despite this, steel mills continue to actively purchase iron ore. However, declining inventory levels and reduced molten iron production pose challenges to the market. The continuous decrease in inventory may potentially impact short-term iron ore prices. It is crucial for market participants to closely monitor these developments.