On October 21, vale officially announced the temporary closure of the Itabirucu tailings dam, which is expected to affect 1.2 million tons of supply in 2019. Vale also announced that its sales target for fiscal year 2019 would be lowered from the median of 307-332 million tons to the lower end of the range. According to the latest annual plan of the four big mines, the supply from the four big mines is expected to be 283 million tons in the fourth quarter, 9.03 million tons less than the same period last year, and 210,000 tons more than that in the third quarter. The total supply is the same as that in the third quarter.

However, from September to October, there were many overhauls of the four major mining berths, railways and other equipment, and the shipment was greatly affected during the overhauls, resulting in an obvious lag in the pace of shipment in October. Australia three major mines in October shipments of iron ore 45.6 million tons, reduce 4.167 million tons, compared to the vale of shipments of iron ore 23.31 million tons, fell 5.754 million tons, if the big four mines to complete their fourth quarter sales task, four mines, 11-12 month average weekly need to ship 21.25 million tons, 1 - week of October in the shipment of 17.56 million tons increased by 21%.

Based on the shipping schedule, it is estimated that after early November, the amount of iron ore arriving from Brazil and Australia will be affected by the pick up of shipping volume.

Overseas non-mainstream ore supply is released

This year, overseas non-mainstream mines have more new production capacity, and the demand for overseas iron ore is weak, iron ore resources will flow more to the Chinese market. From January to September 2019, China's imports of non-australian and Brazilian iron ore increased by 12.7 million tons year-on-year, with 13.31 million tons year-on-year growth in July to September alone. Among them, the increase of iron ore imports from India, Ukraine and Canada was 9.24 million tons. At present, platts' monthly average index is still at $82.6 / ton, and it is expected that non-mainstream ore imports will remain one of the incremental sources of supply. Traders are more willing to take the initiative

By the fourth quarter of the ore shipped outside increase, the domestic distributed tighter, and steel inventory intend on the low side effect, we estimated 11-12 month port iron ore inventories will continue to increase, at the end of port iron ore inventories or will back up to 140 million tons, the level of basic back in April, the iron ore supply basic fill in, supply the relative demand gradually to a slightly loose state. At present, the port trade ore inventory pressure has gradually emerged. As of early November, port trade mine stocks had recovered to 55.57 million tons, up 6.16 million tons from the low of 49.41 million tons in mid-july and down only 1.12 million tons from the same period last year. If there is a gradual increase in foreign ore to Hong Kong, and steel mills continue to maintain low iron ore inventory, then the pressure on traders inventory will continue to increase, so the willingness of traders to take the initiative to reduce inventory has been enhanced. Base or through spot prices accelerated decline in repair

Due to the gradual increase of overseas iron ore arrival pressure, and the expectation of the heating season production limit and off-season steel mills production reduction, iron ore demand pressure, iron ore supply and demand gradually to loose balance transformation, steel mills may intend to maintain low inventory of imported ore strategy until the end of the year. In this case, the liquidity of port trade mines may be weakened, and when the trade mines are relatively high, the pressure of destocking of traders will increase, and the trend of spot price correction may continue. Iron ore futures discount large probability will accelerate the decline in spot prices, futures prices are weak oscillation, to complete the repair.

At present, the profit of rebar is only about 300 yuan/ton, while the profit of spot coke is only 0-50 yuan/ton after lifting and dropping two rounds of landing. Compared with steel and coke, the gross profit of iron ore of 82 dollars/ton is relatively high. If the contradiction between steel supply and demand intensifies in the later stage, when steel mills ask for profits from upstream raw materials, the iron ore or coke replaced by the supply gap gradually becomes the next most important object to be suppressed.

Based on the logic of increased supply of imported ore after November, decreased demand of domestic blast furnace and active destocking of port traders, we believe that there is a possibility of a correction in iron ore prices. From the technical form, the price or adjust to 570-580 yuan/ton before the low vicinity. Later if the downstream steel supply and demand contradiction gradually intensified, steel profits were compressed again, then the price of iron ore has further broken the possibility. （From SMM)