At the macro level: At the press conference held by the Information Office of The State Council on July 18th, the Ministry of Industry and Information Technology emphasized that the work plans for stabilizing growth in ten key industries including "steel" are about to be released. On July 19th, the groundbreaking ceremony for the hydropower project in the lower reaches of the Yarlung Zangbo River was held in Nyingchi City, Xizang Autonomous Region. In addition, the market has a relatively strong expectation for the Political Bureau meeting at the end of the month. Multiple favorable policies from the policy end have driven the steel sector to strengthen, and we are waiting for the clarification of relevant policies against internal competition.
Fundamentals: The mid-year surge has ended, and the shipment and arrival of iron ore (805, -22.00, -2.66%) have seasonally declined. At present, molten iron remains at a high level, and steel mills have considerable profit margins. Their willingness to voluntarily reduce production is not strong, which provides support for the demand of iron ore. However, the main contract price of iron ore has risen above 800 yuan per ton, with a moderately high valuation and a lower basis between futures and spot prices.
On July 18th, BHP Corporation released its production and sales report for the second quarter of 2025. As of the end of the second quarter, BHP Billiton's production for the fiscal year 2025 (July 2024 - June 2025.6) was 288 million tons, remaining the same as last year and achieving its fiscal year target (282 million - 294 million tons, 100% benchmark). BHP Billiton's iron ore target guidance for the fiscal year 2026 (July 2025.-June 2026.) is 284 million to 296 million tons (100% benchmark). On July 23rd, Vale of Brazil released its production and sales report for the second quarter of 2025. In the second quarter, the total output of iron ore was 83.6 million tons, an increase of 3 million tons year-on-year, representing a growth rate of 4%. The main driving factors are the strong performance achieved by the Brucutu operation area with the start of the trial operation of the fourth beneficiation production line, and the S11D mining area setting a new production record in the second quarter.
Operation suggestion: Molten iron is at a high level, and demand is supported. However, the valuation of ore prices is moderately high, and the upward pressure on prices has increased. Pay attention to the situation regarding crude steel output in the anti-involution policy.
1. Market Review
Recently, the main contract of iron ore has been rising continuously, breaking through 800 yuan per ton. Futures led the gains in spot markets, with the basis between futures and spot markets contracting. The commencement of hydropower projects in the lower reaches of the Yarlung Zangbo River has driven the infrastructure sector. The profit level of steel mills is considerable, but their willingness to voluntarily reduce production is not strong, resulting in a month-on-month increase in molten iron.
2. Global shipments have rebounded month-on-month
Last week, the global shipment volume was 31.091 million tons, an increase of 4.08% compared with the previous week. Among them, 19 ports in Australia dispatched 15.712 million tons, a week-on-week decrease of 6.91%. Brazil's 19 ports dispatched 9.078 million tons, an increase of 12.02% week-on-week. From the perspective of mine shipments, as of July 18th, FMG's weekly shipment volume was 2.79 million tons, a decrease of 28.15% compared with the previous week. BHP's shipment volume for the week was 5.148 million tons, an increase of 3.48% compared with the previous week. Rio Tinto's shipment volume for the week was 5.554 million tons, a 11.70% decrease compared to the previous week. Vale's shipment volume for the week was 6.856 million tons, an increase of 10.96% compared with the previous week.
3. The volume of arrivals at the port decreased compared with the previous period
Last week, the weekly port volume at 45 ports was 23.712 million tons, a decrease of 10.93% compared with the previous week. The shipment was relatively low in the first ten days of July, and it is expected that the arrival at the port will decline in the second half of the month. Last week, the average daily output of iron concentrate from 186 mining enterprises (363 mines) was 475,800 tons, an increase of 1.23% compared with the previous week.
4. Molten iron remains at a high level
Last week, the profit rate of 247 sample steel mills was 60.17%, an increase of 0.43 percentage points compared with the previous week. The operating rate of blast furnaces in 247 sample steel mills was 83.46%, remaining unchanged from the previous week. The average daily output of molten iron from 247 sample steel mills was 2.4244 million tons, an increase of 1.10% compared with last week.
Last week, the output of the five major types of steel for the week was 8.6819 million tons, a decrease of 0.52% compared with the previous week. The apparent consumption of the five major types of steel was 8.7011 million tons, a decrease of 0.34% compared with the previous week. The inventory of the five major types of steel was 13.3766 million tons, a decrease of 0.14% week-on-week.
5. Spot trading has improved
Last week, the average daily trading volume of spot goods at major Chinese ports was 981,000 tons, an increase of 8.88% compared with the previous week. The average daily trading volume of forward spot goods was 1.548 million tons, an increase of 24.34% compared with the previous week.
6. The decline in port inventories narrowed
Last week, the iron ore inventory of 247 steel mills was 88.2216 million tons, a decrease of 1.75% compared with the previous week. The iron ore inventory at 45 ports was 137.8521 million tons, an increase of 0.14% compared with the previous week. Among them, the inventory of Australian mines at ports was 61.1782 million tons, increasing by 1.22% week-on-week. The inventory of Brazilian mines at ports was 48.3623 million tons, a week-on-week decrease of 1.19%. The inventory of iron concentrate from 186 mining enterprises (363 mines) was 850,000 tons, a week-on-week decrease of 4.78%. The average available days of iron ore inventory from 114 steel mills was 22.94 days, a decrease of 0.44 days compared with the previous week.
7. Summary of viewpoints
At the macro level: At the press conference held by the Information Office of The State Council on July 18th, the Ministry of Industry and Information Technology emphasized that the work plans for stabilizing growth in ten key industries including "steel" are about to be released. On July 19th, the groundbreaking ceremony for the hydropower project in the lower reaches of the Yarlung Zangbo River was held in Nyingchi City, Xizang Autonomous Region. In addition, the market has a relatively strong expectation for the Political Bureau meeting at the end of the month. Multiple favorable policies from the policy end have driven the steel sector to strengthen, and we are waiting for the clarification of relevant policies against internal competition.
Fundamentals: The annual surge has ended, and the shipment and arrival of iron ore in July saw a seasonal decline. At present, molten iron remains at a high level, and steel mills have considerable profit margins. Their willingness to voluntarily reduce production is not strong, which provides support for the demand of iron ore. However, the main contract price of iron ore has risen above 800 yuan per ton, with a moderately high valuation and a lower basis between futures and spot prices.
On July 18th, BHP Corporation released its production and sales report for the second quarter of 2025. As of the end of the second quarter, BHP Billiton's production for the fiscal year 2025 (July 2024 - June 2025.6) was 288 million tons, remaining the same as last year and achieving its fiscal year target (282 million - 294 million tons, 100% benchmark). BHP Billiton's iron ore target guidance for the fiscal year 2026 (July 2025.-June 2026.) is 284 million to 296 million tons (100% benchmark). On July 23rd, Vale of Brazil released its production and sales report for the second quarter of 2025. In the second quarter, the total output of iron ore was 83.6 million tons, an increase of 3 million tons year-on-year, representing a growth rate of 4%. The main driving factors are the strong performance achieved by the Brucutu operation area with the start of the trial operation of the fourth beneficiation production line, and the S11D mining area setting a new production record in the second quarter.
Operation suggestion: Molten iron is at a high level, and demand is supported. However, the valuation of ore prices is moderately high, and the upward pressure on prices has increased. Pay attention to the situation regarding crude steel output in the anti-involution policy.