New Lake Futures: Market sentiment is relatively optimistic, and mineral prices are fluctuating at high levels

In terms of the news cycle, affected by the U.S.-Iran conflict, iron ore originally shipped to the Middle East has been diverted to China. From the perspective of total supply, it may further intensify domestic inventory pressure. Structurally, the diverted shipping has mainly shifted to iron concentrate. At present, the best-deliverable commodity on the market is primarily Brazilian ore with medium to high grade. Pay attention to subsequent changes in the basis. In addition, in the near term, shipping freight rates have surged significantly due to geopolitical factors, which continues to support domestic ore prices in the short term.

Fundamentals have not changed much. On the supply side, recent shipments have fallen slightly back to a neutral level, and arrivals are gradually fulfilling the previous high-shipment expectations. On the demand side, during last week’s important meetings, environmental production restrictions at steel mills in North China caused blast furnace iron output to drop sharply; this week, the focus is on the speed and extent of steel mills’ restart. Regarding inventories, with demand recovering, the pace of increase in port inventories has slowed somewhat.

Overall, in March iron ore supply and demand are both strong. Coupled with potential disruptions related to long-term contracts, the earlier constraints on iron ore prices caused by high supply and high inventories are expected to ease as demand increases. Iron ore prices may continue to trade in a high-range consolidation. Previously opened long positions can gradually take profit. Going forward, the key is to track downstream demand. If, by the end of March, terminal demand recovers less than expected and makes it difficult for midstream steel inventories to be destocked, there may be a mild “negative feedback” risk; at that time, you need to adjust positions in a timely manner. Over the medium to long term, the outlook remains bearish based on mine production cycle considerations.