Newsletter summary

The ferrous metal plate rebounded in AprilIgucasinonodepositbonusThe main contract for iron ore rose 14%, but fell 6-13% from January to April. Steel enterprises continue to resume production from May to June, increasing supply pressure, mineral prices or pressure, we need to pay attention to the effectiveness of the policy and demand.

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Black metal plates rebounded in April, led by iron ore and coking coal, but since the beginning of the yearIgucasinonodepositbonusThe downward trend has not been reversed. From January to April, the main contract of the plate fell by 6-13%, led by iron ore.

The core factor of the rebound in ore prices in April is the resumption of production by steel companies, which runs through the whole month of price increases. In the first half of the month, shipments from overseas mines were disturbed; in the second half of the month, policy efforts were made to support the rebound in mine prices. However, the pressure from high inventories also affected the whole of April and curbed mine prices during the policy window.

Looking forward to May-June, the momentum of resuming production by steel companies is expected to continue, but the intensity of resuming production may be weakened. It is difficult for the supply side to reproduce the reduction scenario, and the replenishment and final impulse operation of FMG and Rio Tinto are expected to drive ore shipments to the port to continue to pick up and maintain high levels, and the supply pressure may appear again. Under the effect of the rebound in supply and demand, the current high inventory level is expected to continue in May-June, putting periodic pressure on ore prices. On the policy front, there are still expectations of further stimulus. If the policy is not as effective as expected, under the pressure of high inventory, mineral prices may return to the downward trend.

Risk factors include the policy-side release of stimulating demand, boosting the overall demand of the black industry chain (upside risk), and weak terminal demand represented by real estate suppresses profit improvement of steel companies, crude steel production regulation and control, pressure on steel production and resumption of production at the end of energy reduction policies, as well as high shipping and further increased inventory pressure to Hong Kong (downside risk).