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Affected by the news of output cuts at steel mills, ferrous metals prices continued to fall today, with iron ore futures down 3.26% at 844.5 yuan/mt as of CST 10:20, recording eight consecutive days of drop.
The decline was mainly due to weak end demand and poor market sentiment. At the same time, the pessimism in the market has intensified due to the expected production reduction by steel mills. Wait-and-see sentiment dominated the spot market yesterday. The transaction prices of PB fines in Shandong were mainly 930 yuan/mt, which was 10 yuan/mt lower than in the previous day, while super special fines were sold at 785-788 yuan/mt. The transaction prices of PB fines in Tangshan were mainly 935 yuan/mt, which was 5-25 yuan/mt lower than in the previous day, while super special fines were sold at 798 yuan/mt.
According to SMM statistics, as of June 15, the blast furnace operating rate fell 0.66 percentage point to 81.34%, mainly due to the increase in coke prices and the decline in finished product prices, which caused losses on steel mills.
According to the SMM survey, at present, the steel mills who have no blast furnaces have stopped production on a large scale due to losses. Although the current pig iron production of steel mills who have blast furnaces is still at a high level, they have recently suffered losses due to the increase of 300 yuan/mt in coke prices. The production enthusiasm of steel mills has weakened, which combined with poor downstream demand, forced some mills to hot idle their blast furnaces. Currently, steel companies that reduce production are mainly in north-east, north and central China. According to SMM survey, more mills in north China will put blast furnaces under maintenance over the next two weeks. Steel mills in other regions may also reduce output due to losses. At the same time, bad weather also weighed on demand and market sentiment. Iron ore prices will remain under pressure.