Steady Output Growth Amidst Fluctuating Raw Material Landscape

Key Production Indicators and Recent Trends

The international pig iron market is experiencing a sustained production uptick, driven by strategic capacity adjustments and recovering steel sector fundamentals. Latest industry reports highlight notable improvements in blast furnace utilization and daily output metrics, underscoring the sector’s resilience.

Operational Metrics Update

A recent survey by the Shanghai Metal Market (SMM) covering 242 major steel mills indicates that the blast furnace operating rate stood at 87.96% as of June 25, 2025—marking a 0.26% month-on-month increase. This incremental growth signals a gradual recovery in operational efficiency across the industry.

Daily average pig iron production reached 2.4179 million metric tons, reflecting a month-on-month increase of 9,500 metric tons. While growth appears moderate, it demonstrates consistent momentum in steelmaking activities. As noted in an SMM analysis, "This week’s production resumptions were primarily driven by targeted blast furnace restarts," indicating that mills are adopting selective capacity expansion rather than broad-based output hikes. Analysts attribute this trend to expanding profit margins—stable steel prices coupled with moderating input costs have enabled producers to capitalize on favorable market economics.

Capacity Utilization Outlook

Industry sources suggest multiple steel mills plan to restart additional blast furnaces in the coming week. The SMM report emphasizes, "With expanding profit margins, more blast furnaces are scheduled for resumption next week, maintaining pig iron output at elevated levels in the short term." This strategic capacity ramp-up persists despite market uncertainties, including volatile raw material prices and uneven end-user demand—reflecting producers’ confidence in near-term market stability.

Iron Ore Price Dynamics: Stability Amidst Mixed Signals

Iron ore prices exhibit a pattern of cautious stability, with supply-demand dynamics creating a balanced yet tentative pricing environment across key trading hubs.

Recent Price Movements

Dalian iron ore futures have shown muted performance, with the benchmark I2509 contract closing at 702.5, down 0.43% in the most recent trading session (SMM, June 25, 2025). This slight decline reflects cautious market sentiment rather than fundamental weakness.

Trading activity is characterized by moderate liquidity: "Traders exhibited moderate selling willingness," notes SMM, indicating a lack of panic selling or aggressive hoarding. Steel mills have adopted a cautious procurement stance—"Mills maintained a wait-and-see approach, though low-level inquiries persisted," per the report.

Regional Price Disparities

In Shandong, a key iron ore trading hub, PB fines have traded consistently around 700 yuan/mt. In Tangshan, another major steel production center, PB fines trade at approximately 710–715 yuan/mt—a 10–15 yuan premium over Shandong prices, driven by regional supply chain dynamics.

Conflicting Pressures on Iron Ore Markets

The iron ore market faces opposing forces that have created a delicate price balance.

Upward Support Factors

• Rising pig iron production (2.4179 million mt daily) stabilizes ore demand.

• Ongoing blast furnace restarts signal sustained raw material needs.

• Expanding steel production margins drive higher capacity utilization.

Downward Pressures

• Weakening end-use consumption raises inventory concerns.

• High production levels may trigger an inventory inflection point for steel products.

• Structural imbalances between upstream and downstream sectors introduce uncertainty.

Outlook for Pig Iron and Iron Ore Markets

Short-Term Projections

• Pig iron output is expected to remain elevated, supported by planned blast furnace restarts.

• Iron ore prices may fluctuate within a narrow range due to conflicting market forces.

Strategic Considerations

• Steel mills prioritize production volume to maintain profit margins.

• Traders adopt cautious positioning amid price uncertainty.

• End-users benefit from stable input costs in the short term.

FAQ: Key Insights for Industry Stakeholders

What is the current pig iron production trend?
Daily output stands at 2.4179 million mt, up 9,500 mt month-on-month, with a blast furnace operating rate of 87.96%.

How do iron ore prices respond to production changes?
Prices face conflicting pressures, leading to narrow-range fluctuations (Shandong: ~700 yuan/mt; Tangshan: ~710–715 yuan/mt for PB fines).

Market Data Summary

Market Insight: Steel mills prioritize production volume over short-term cost optimization, signaling confidence in operational efficiency. The market currently balances production growth with price stability.