1、2016 Iron ore demand declines.

　　This year, the elimination of outdated production capacity and the crackdown on “strip steel” have been vigorously promoted, enabling the steel industry to turn from loss to profit. Profit is the primary driving force behind commodity production, and crude steel output has seen a slight rebound. According to data from the National Bureau of Statistics, 2016 Year 1-11 Month, national crude steel production 73946.2 Ten thousand tons, an increase compared to the same period last year. 108 Ten thousand tons, increase rate 0.4% But 2016 Year 1-11 Month, China's blast furnace pig iron production 6377.8 10,000 tons, a decrease compared to the same period last year. 555.2 Ten thousand tons, decline 0.3% While crude steel production has increased, pig iron production has declined, reflecting a growing use of scrap steel by steel mills and a corresponding drop in demand for iron ore. The cumulative year-on-year decline in pig iron production shows a stepwise trend, and the sustained downward trend in iron ore demand cannot be overlooked.

　　2 Iron ore imports increased while domestic production declined.

　　Customs data shows: 2016 Year 1-11 In the month, China imported iron ore domestically. 93524 Ten thousand tons, an increase compared to the same period last year. 9.2% The share of Australian mines has also decreased from 60% Stable left and right to 83% In other words, in recent years, against the backdrop of declining mineral prices, Australian mines have rapidly seized market share from non-mainstream miners thanks to their cost advantages. And... 2016 Year 1-11 China's raw iron ore production for the month was 117691.2 10,000 tons, down year-on-year 6.2% Under conditions of declining aggregate demand, rising imports, a sharp increase in port inventories, and expanded production at large and medium-sized domestic mines, the survival space for small and medium-sized domestic mines has become extremely limited, and the country’s reliance on foreign mines continues to intensify.

　　3 Domestic imported ore port inventories have risen sharply.

　　This year, port inventories of imported iron ore have increased significantly. 2016 There was no significant decline throughout the year, and... 5 Has been stable since the beginning of the month. 1 Exceeding 100 million tons, becoming a constant. The main reason for the substantial increase in port inventories is: First, frequent fluctuations in ore prices have prompted steel mills to adopt... “ Low inventory, multiple batches ” In terms of procurement strategy, steel companies’ iron ore inventories are at relatively low levels. ; Second, the sharp rebound in iron ore prices has once again boosted the profitability of overseas mines. The four major international mining companies have all ramped up their production capacities, and shipment volumes continue to rise without any sign of slowing down.

　　4 Steel prices and ore prices have generally followed similar trends; the financial attributes of iron ore cannot be overlooked.

　　2016 Since the beginning of this year, iron ore prices have surged sharply, reaching a two-year high, driven by the sharp rise in downstream steel prices.

　　3 Since the beginning of the month, pessimistic expectations have led to a slow recovery in steel supply. However, demand has rebounded faster than expected, resulting in a significant mismatch between supply and demand that has driven steel prices sharply higher. Supported by the recovery of steel mills’ profits, steel mills have become highly active in replenishing their iron ore inventories, thereby boosting iron ore prices. But... 5 After the start of the month, steel inventory pressure increased significantly, causing steel prices to plunge and steel mill profits to shrink sharply. As a result, steel mills generally began to increase their demand for lower-grade iron ore in order to reduce blast furnace utilization rates. Affected by this trend, demand for iron ore started to decline, leading to a drop in its price. Meanwhile, due to a mismatch between supply and demand in the coking coal and coke markets, prices surged, driving up both black commodity futures and spot steel prices, and causing iron ore prices to rise sharply.

　　But enter 12 Steel demand plummeted after the start of the month, causing steel prices to plunge. Steel companies have been forced to cut production due to smog restrictions, which in turn has affected demand for iron ore. Additionally, the most active iron ore futures contract... I1705 The contract is in. “ Double 12 inches Charge up 650 After reaching a high, the market has consistently failed to break free from a volatile downward trend, successively falling below... 600 Then, with renewed vigor, it broke through. 570、550 The key support levels remain intact, and even the brief rebound in steel prices along the way has failed to halt the decline in iron ore prices. Market sentiment remains pessimistic, and spot prices for iron ore have begun to enter a downward trend, making short-term rebounds unlikely. Looking ahead to the medium and long term, the four major mining companies are expected to significantly increase their production next year. 7000 Ten thousand tons, provided that the mineral price remains at... 70 Near the U.S. dollar level, a large number of domestically produced mines and non-mainstream overseas mines will also resume production, adding to the mix. 2017 The ongoing efforts to reduce overcapacity will continue, and given the mismatch in cycles, the probability of a sharp drop in iron ore prices for distant-month contracts remains relatively high.

　　5 Under the general trend of oversupply, stage-specific contradictions are becoming more prominent.

　　After the major turbulence in the first half of the year, new stage-specific contradictions have emerged, and the short-term fundamentals are undergoing subtle yet gradual changes.

　　As the entire industrial chain experiences price increases driven by demand, supply is bound to rise.

　　On the ore supply side, countries or regions that previously reduced or halted production due to price factors have, unsurprisingly, resumed market supplies to varying degrees during this round of price increases. Specifically, 1-5 In the month, China's cumulative iron ore imports reached 4.12 100 million tons, up year-on-year 9% Among them, iron ore imported from Australia and Brazil underwent changes at the end of last year... 1、2 The monthly market cleansing is underway, and concentration continues to rise to... 83.3% , and at the same time with 3 The market saw a significant rally in the month, with typical non-mainstream countries gradually increasing trading volumes—single. 5 Month-on-month increase compared to the end of last year. 59.5 Ten thousand tons. However, mainstream mines have not reduced production.

　　In addition, the operating rate of domestic mines has also risen from its previous lowest level by approximately... 10% recovery. According to our website’s tracking and statistics, as of the end of June, the operating rate of domestically produced mines... 63.51% ，3 This major market shake-up at the start of the month has at least boosted domestic iron ore prices. 2000 Production resumes at full capacity, despite... 5、6 The monthly startup rate has fluctuated slightly, but the overall increase or decrease has been relatively small.

　　Therefore, following the major market upheaval, the new supply-side contradictions are now centered on domestic mines and non-mainstream iron ore sources. Currently, most domestic mines are operating at or near the break-even point, with only marginal profits; although production starts have stopped increasing, they have not yet shown any significant decline. Meanwhile, supply from non-mainstream countries has risen markedly along with rising prices. Although prices will lag somewhat behind the reduction in output, overall supply remains higher than the previous lowest levels, and after a recent dip, it has temporarily stabilized. On the other hand, production expansion projects in mainstream countries are proceeding as planned, keeping supply growth on track. Overall, iron ore capacity will continue to be oversupplied in the coming period.

　　II. 2017 China's iron ore demand this year

　　China’s real estate sector is not pessimistic about its demand for iron ore.

　　Currently, the Chinese government has stepped up its regulatory efforts on the real estate sector compared to the beginning of the year. The market is somewhat concerned about demand in the real estate industry next year. However, it’s still too early to conclude definitively that the real estate sector will drag down steel demand next year. As of... 11 In the month, the cumulative year-on-year increase in newly started construction area in the real estate sector rose. 7.6% The completed area increased year-on-year. 6.4% Sales area increased year-on-year. 24.3% The saleable area decreased year-on-year. 0.8% . Saleable area since 2012 For the first time since [year], year-on-year growth has turned negative, indicating that the real estate sector has achieved significant results in destocking. The growth rate of sales area has markedly exceeded the growth rates of completed construction area and newly started construction area, signaling a noticeable shift in the supply-demand relationship in the property market.

　　From the perspective of land supply, 1–11 The cumulative year-on-year decrease in monthly land acquisition area. 4.3% The cumulative area of developable land remained flat year-on-year. This indicates that property developers’ enthusiasm for acquiring new land this year is not high, and they are mainly focusing on depleting their existing land inventory from previous years. Looking at the production and sales data for land and the real estate sector, the growth rate of both land supply and newly built housing supply has noticeably slowed down. However, the sales side is showing clear signs of improvement, and the current adjustment policies are... “ One city, one strategy. ” The primary impact lies in the down payment ratio; there are no restrictions on interest rates at the loan origination stage—meaning there’s no significant pressure on funding costs, as is often discussed.

　　This year, China’s monthly year-on-year growth rate in real estate sales area has consistently remained in the double digits, although it has been affected by regulatory policies. 11 Monthly sales growth is slowing, but even under a pessimistic outlook, real estate sales... “ Peak ” This will also be reflected in the newly started construction area only next year. 5 As of now, based on various data available, iron ore demand in the real estate sector is expected to remain relatively stable in the first quarter of next year. Additionally, we believe that, given the current state of inventory reduction in the real estate market and the changing intensity of regulatory measures, there is a high likelihood of inventory replenishment occurring next year—but the extent of such replenishment remains to be seen. In summary, the demand for iron ore from China’s real estate sector is not pessimistic.