Recent Performance of Key Iron Ore Price Spreads Since 2024, large-scale iron ore projects in and outside China have been continuously commissioned, leading to a notable increase in iron ore supply. However, the sharp decline in downstream steel demand caused the iron ore supply-demand gap to widen continuously. The iron ore supply-demand pattern shifted from tight to loose, which also led to a year-on-year decline in average iron ore prices. Nevertheless, influenced by multiple factors such as iron ore supply and demand, port inventory, and steel mill profits, the frequency of price spread fluctuations among iron ore varieties increased. SMM reviewed the recent trends of key price spreads, as detailed below: ◼ Internal Differentiation Among Medium-Grade Resources, with Price Spreads Widening Significantly Affected by long-term contract negotiations, the trade liquidity of mainstream medium-grade ore deteriorated significantly. The lack of trade liquidity in certain varieties was directly transmitted to variety price spreads, with price spread fluctuations of mainstream medium-grade ore such as MNPJ intensifying notably. Among them, the price spread between PB fines and Jimblebar fines was the most sensitive: In early September 2025, the price spread between the two was 20 yuan/mt. As news of the ban on Jimblebar fines port cargo pick-up was released, its spot price came under pressure and dropped sharply, with the price spread quickly widening to around 50 yuan/mt. In addition, affected by the reduction in tradable varieties of mainstream Australian medium-grade ore, the variety price spreads between PB fines and Newman fines, as well as MAC fines, also showed a notable narrowing trend. Source: SMM ◼ High-Grade Premium Highlighted, Price Difference Between High and Medium-Grade Ore Widening Rapidly From Q4 2025 to date, price spread fluctuations among high, medium, and low-grade ore were equally intense. After entering 2026, structural contradictions in the iron ore market became further pronounced. Affected by declining raw ore quality from northern Brazilian mining areas, IOCJ fines supply experienced a trend of contraction. Coupled with the cost-effectiveness recovery brought by earlier price weakness and the release of concentrated restocking demand from steel mills ahead of Chinese New Year, IOCJ fines prices received strong support. Meanwhile, mainstream medium-grade ore remained tight in available resources due to trade flow disruptions. Against the backdrop of a shift between high and low-grade resources, the price difference between high and medium-grade ore widened again. Reviewing the period from November 2025 to March 2026, north China entered the heating season, and environmental protection-driven production restrictions became more frequent. As Chinese New Year and the Two Sessions approached, production restrictions were further tightened, with blast furnaces at steel mills in multiple areas of Hebei shut down, leading to a notable decline in hot metal production. Notably, during this period, steel mill profits remained generally stable, and some enterprises, in pursuit of higher output, tended to increase the blast furnace blending ratio of high and medium-grade ore while correspondingly reducing procurement of low-grade ore. Driven by this structural demand shift, the price difference between medium and low-grade ore widened. Source: SMM ◼ Lump-Fines Price Spread Experienced a "V"-Shaped Trend, Declining First Then Rising Since sintering processes generate relatively high pollution emissions, environmental protection-driven production restrictions typically prioritized restricting sintering and shaft furnace production. In north China and north-east China, during heating seasons or major events, if production restriction periods are prolonged, steel mills often increase the proportion of lump ore in their mix to alleviate tight supply of sinter and pellet, thereby driving lump ore prices to rise rapidly. However, over the past three years, the impact of seasonal factors on lump ore demand has gradually weakened, mainly for three reasons: first, steel mills have successively completed ultra-low emission retrofits for flue gas, reducing overall pollution intensity; second, sintering machines in Hebei and other regions have surplus capacity, and environmental protection-driven production restrictions have mostly been limited to within one week, significantly reducing the actual impact on production; third, steel mill profits have been under pressure, reducing the pursuit of hot metal production, and the proportion of high-grade ore usage has adjusted downward accordingly. Under the combined influence of the above factors, since H2 2024, lump ore premiums have continued to decline, hitting a new low by the end of 2025. Meanwhile, the price spread between PB lump and PB fines also narrowed significantly, contracting from 195 yuan/mt to 63 yuan/mt, a decline of over 50%. Against this backdrop, the cost-effectiveness of lump ore gradually became more prominent. Combined with the extended environmental protection-driven production restriction period in northern China in November 2025, the proportion of lump ore usage began to increase. However, as lump ore premiums had remained low for an extended period, product returns were poor, and major mines correspondingly reduced lump ore production. Driven by both supply contraction and demand growth, lump ore premiums rebounded, and the lump-fines price spread widened accordingly. As of mid-March 2026, lump ore premiums have risen to a periodic high, up nearly 280% from early January. The lump-fines price spread has also gradually widened to above 100 yuan/mt. Source: SMM Key Driving Logic of Product Price Spreads Mix Adjustment Led by Steel Mill Profits (Core Driver) ◼ 1 Profit Expansion Phase: High Hot Metal Production Drives Demand for High-Grade Ore When steel mill profits widened and per-mt crude steel returns were higher, steel mills pursued pig iron production and tended to raise the grade of furnace feed. When selecting iron ore, they preferred to purchase high-grade or medium-grade ore. As shown, in H1 2025, profits of common billet at China's steel mills rebounded notably. Common billet profits reached a peak of nearly 350 yuan/mt. At this point, to boost production, steel mills moderately increased the proportion of high-grade IOCJ fines, as well as high-grade lump and pellet usage. Demand growth over a certain period stimulated high-grade ore price increases, and it was clearly evident that the price spread between high-grade and medium-grade ore began to widen. Source: SMM ◼ 2 Profit Contraction Phase: Cost Reduction and Efficiency Improvement Boost Low-Grade Ore Procurement After steel mill profits contracted, to reduce costs and improve efficiency, steel mills significantly increased their focus on cost-effectiveness across iron ore products, tending to prioritize products with higher cost-effectiveness. Within the mid-grade ore range, steel mills preferred varieties with a larger price spread relative to PB fines. Meanwhile, weakening profits meant that higher pig iron or crude steel production led to greater loss pressure. Therefore, steel mills controlled pig iron production rationally from the perspective of economic efficiency. However, given the high comprehensive costs of shutting down or reducing blast furnace loads, steel mills tended to maintain normal blast furnace operations while lowering furnace charge grade and increasing the use of low-grade ore. Under these circumstances, assuming other conditions remained unchanged, the price spread between mid- and low-grade ore tended to narrow. Taking the market around October 2025 as an example, billet profits continued to decline, and the mid-to-low-grade ore price spread narrowed accordingly. Data source: SMM Dual Transmission Paths of Seasonal Effects ◼ Seasonal factors influenced iron ore variety demand through dual paths of "end-use demand fluctuations" and "heating season environmental protection-driven production restrictions" ◼ 1. Seasonal fluctuations in end-use demand: impact on steel mill production and raw material procurement pace The shift between off-season and peak season in end-use demand created cyclical impacts on iron ore variety demand. Off-seasons were mainly concentrated in summer (June–August) and winter (November–February): high temperatures and heavy rainfall in summer suppressed construction, while hydropower replacing thermal power in south China lowered electric furnace production costs and squeezed blast furnace hot metal production; in winter, construction sites in north China shut down and steel demand contracted. During off-seasons, steel mills increased blast furnace maintenance and lowered furnace charge grade to control production, with demand for high-grade iron ore weakening accordingly. During peak seasons (spring March–May, autumn September–October), downstream construction activity was released intensively, steel mills actively ramped up production, and furnace charge grade rose in tandem, strengthening demand for high-grade fines, lump ore, and pellet, supporting their premium performance. In summary, seasonal fluctuations in end-use demand drove cyclical changes in iron ore variety demand by influencing steel mill production and furnace charge grade selection. Transmission logic: end-use demand fluctuations → steel mill production adjustments → changes in total iron ore procurement volume → corresponding shifts in variety demand structure Data source: SMM Data source: SMM ◼ 2. Environmental protection-driven production restrictions during the northern heating season: direct disruption to furnace charge structure and variety premiums Heating season environmental protection-driven production restrictions primarily targeted steel mills in north China, spanning November to April of the following year . During this period, if air quality failed to meet standards, local environmental protection authorities would initiate production restriction measures, prioritizing restrictions on sintering machines and shaft furnaces, leading to tighter supply of sinter and pellet. To maintain blast furnace operations, steel mills were forced to increase the proportion of lump ore in their charge mix, driving a seasonal strengthening of lump ore demand, which in turn supported lump ore premiums and a rise in the lump-fines price spread. Transmission logic: environmental protection policy → sinter machine production restrictions → forced adjustment of furnace charge structure → stronger demand for lump ore and pellet ore → premium fluctuations Data source: SMM Coke prices affected the iron ore product mix through dual channels of fuel costs and profit margins ◼ 1 High coke prices suppressed lump ore demand As raw material directly charged into furnaces, lump ore consumed more coke than sinter and pellet ore, so steel mills typically controlled the lump ore charging ratio at around 10%. During periods when coke prices fluctuated at highs, steel mills tended to reduce lump ore proportions to control fuel costs. Before H1 2024, coke prices fluctuated at highs, and the lump ore usage ratio continued to decline, falling to a low of 9.8%. However, as coke prices underwent nearly a year of decline and entered a low range, combined with relatively low lump ore premiums and the push from environmental protection-driven production restriction policies, the lump ore charging ratio gradually rebounded, once exceeding 11%. Data source: SMM ◼ 2 Demand for high-silicon fines suppressed The higher the silicon content in iron ore, the greater the blast furnace slag volume and the higher the coke ratio. Therefore, low-silicon smelting is a key direction for blast furnace process optimization and a critical lever for cost reduction and efficiency improvement. Among current iron ore products on the market, mainstream mid-grade ore Si content mostly ranges from 4-6%. Brazilian high-silicon BRBF has relatively high Si content at 10-12%. Therefore, Australian ore is mostly used as the primary material, while Brazilian ore and non-mainstream ore serve as auxiliary materials. When coke prices were at highs, the cost disadvantage of high-silicon resources became prominent, and steel mills tended to reduce Brazilian high-silicon BRBF, Indian fines, and South African fines, shifting to mid-to-high-grade fines with lower silicon content (such as PB fines and IOCJ fines). Going forward, the iron ore oversupply pattern will become more prominent, while under overcapacity pressure in China's steel sector, steel mill profits will remain poor. Therefore, cost reduction and efficiency improvement will be a long-term direction, driving stronger demand for low-silicon, low-aluminum products. Consequently, mainstream mid-grade ore will remain the product with the best market circulation. Data source: SMM ◼ 3 Rising share of mid-to-low-grade fines under low profits High coke and ore prices squeezed steel mill profits, and steel mills no longer pursued hot metal production maximization, instead increasing mid-to-low-grade fines usage and lowering charging grade to control costs. Based on historical data, such situations occurred in Q3 2024 and Q2 2025. Auxiliary Variables: Inventory, Substitution, and Preferences ◼ 1 Product substitution effect: mid-grade inter-substitution and "high-low blending" substitution In the product mix of steel mill sinter, "high-low blending" and "mid-grade blending" are commonly mentioned concepts, with the core principle being to select the optimal products based on the cost-effectiveness of different iron ore varieties. Under normal circumstances, steel mills use MNPJ (i.e., mainstream medium-grade ore types such as Mac fines, Newman fines, PB fines, and Jimblebar fines) as primary materials, or adopt a high-low grade combination of " IOCJ fines + super special fines " as primary materials, and adjust auxiliary material ratios based on the acidity and alkalinity of the primary materials. Using mainstream medium-grade ore types as primary materials is the more common practice. When mainstream medium-grade ore types are periodically less cost-effective — for example, when the combined cost of "IOCJ fines + super special fines" is lower than that of medium-grade PB fines — some steel mills periodically switch to high-low grade combinations as primary materials to reduce costs. As shown in the chart, during March to April of 2024 and 2025, the cost-effectiveness advantage of high-low grade combinations was significantly superior to that of medium-grade ore, and therefore some steel mills in regions such as Hebei and Shanxi predominantly chose high-low grade combinations as primary materials during these periods. Data source: SMM ◼ 2. Inventory Structure Drives Price Spreads among Varieties: Inventory Changes and Price Transmission Logic Inventory is the most intuitive reflection of short-term supply-demand imbalances in the iron ore market. When supply is loose or demand weakens, port inventory continues to rise, and inventory levels generally exhibit a negative correlation with prices. Once inventory accumulates to a certain level, it tends to exert significant downward pressure on prices. Over the past two years, the inventory and price trends of Ukrainian concentrate (hereinafter "Ukrainian concentrate") have well validated this pattern. In November 2023, Ukrainian concentrate shipments gradually resumed, but as steel mills still had concerns about the stability of its supply, actual usage did not increase significantly, leading to continued port inventory accumulation. By May 2024, SMM ten-port inventory data by variety showed that Ukrainian concentrate inventory exceeded 3 million mt , exerting significant downward pressure on prices, with Ukrainian concentrate prices falling from 1,200 yuan/mt at the beginning of the year to 900 yuan/mt. Meanwhile, the price spread between Ukrainian concentrate and PB fines also narrowed from 160 yuan/mt to 80 yuan/mt, and its cost-effectiveness advantage gradually emerged, driving a notable increase in steel mill demand. Entering early 2026, affected by a decline in Ukrainian concentrate supply, port inventory retreated from highs to around 1.1 million mt, and tightening supply supported a notable rebound in Ukrainian concentrate prices, with the price spread versus PB fines also widening from 80 yuan/mt to around 100 yuan/mt . Data source: SMM Variety Cost-Effectiveness Assessment Model and Selection Strategy ◼ 1. Horizontal Comparison: Micro-Indicator Assessment among Same-Grade Varieties. In recent years, global mainstream iron ore supply entered a resource transition period, with notable structural adjustment characteristics. On one hand, some aging mines faced resource depletion , with declining mining grades; on the other hand, new mines were still in the capacity ramp-up stage , and the transition between old and new resources still required time. As a result, quality indicators of multiple mainstream varieties were broadly downgraded. Among them, medium-grade ore indicators represented by PB fines and Newman fines weakened; due to declining raw ore quality in Brazil's northern system, not only did IOCJ fines production contract, but the proportion of high-silicon special IOCJ fines output also rose, with silicon content increase being particularly notable beyond the decline in iron grade. Against this backdrop, steel mills tended to assess the most cost-effective varieties by calculating comprehensive price spreads. From the perspective of minor indicator adjustment values, the smaller the adjusted price spread relative to the MMI 61% index, the better the variety met steel mill demand. Based on Q1 averages, Jimblebar fines offered the best cost-effectiveness, followed by PB fines, Mac fines, Newman fines, and BRBR. However, since Jimblebar fines could not be traded or delivered, PB fines remained the optimal choice among medium-grade ores. Data source: SMM ◼ 2. Vertical Comparison: Historical Percentile Timing of High, Medium, and Low-Grade Price Spreads Beyond the horizontal comparison of price spreads among varieties of similar grades, vertically examining price spread changes among high, medium, and low-grade ores was equally important. By analyzing historical percentiles of the price difference between high and medium-grade ore and the price difference between medium and low-grade ore, the relative valuation of each grade could be assessed to guide variety switching and timing. Price difference between high and medium-grade ore: when at historical highs, the high-grade premium was excessive, and switching to medium-grade was advisable under profit pressure; when at historical lows, high-grade cost-effectiveness stood out, and moderate allocation increases were appropriate. Beyond premiums, using IOCJ fines and PB fines as benchmarks and calculating based on their indicator costs, the neutral value of the price spread between the two was 100 yuan/mt. When the spread exceeded 100 yuan/mt, PB fines offered better cost-effectiveness; when below 100 yuan/mt, IOCJ fines were more cost-effective. Price difference between medium and low-grade ore: when at historical highs, low-grade advantages were evident, suitable for cost reduction during thin-margin periods; when at historical lows, medium-grade cost-effectiveness improved, allowing flexible adjustments. Using PB fines and SSF as benchmarks and calculating based on their indicator costs, the price spread between the two ranged from 100-120 yuan/mt, with a midpoint of 110 as the neutral value. When the spread exceeded 110 yuan/mt, super special fines offered better cost-effectiveness; when below 110 yuan/mt, PB fines were more cost-effective. Combining the historical percentiles of both, allocation windows for each grade could be captured based on profit cycles to achieve cost optimization. Data source: SMM ◼ 3 Morphology Comparison: Arbitrage Logic of Fines-Lump Price Spread and Lump Ore Premium. Taking the price spread between PB lump and PB fines as an example, influenced by steel mill profits and coke prices, the fines-lump price spread exhibited notable fluctuations. Historical data showed the price spread between PB lump and PB fines ranged approximately 80–500 yuan/mt. In H1 2021, driven by high steel mill profits and supply-demand mismatch, the fines-lump price spread once approached the historical high of nearly 500 yuan/mt. In recent years, as steel mill profits narrowed, the price spread contracted significantly. In 2025, the fines-lump price spread operated within a range of 70–220 yuan/mt, with an annual average of approximately 128 yuan/mt. In early 2026, the lump ore premium fell to $0.04/dmt, and the price spread narrowed to 65 yuan/mt. Given that China's overcapacity landscape has not fundamentally changed, steel mill profits are expected to remain basically flat with 2025, and the fines-lump price spread is likely to maintain the current range. Based on this assessment: When the lump-fines price spread exceeds 120 yuan/mt, PB fines offer better value; When the lump-fines price spread falls below 120 yuan/mt, PB lump offers better value. Steel mills can choose accordingly based on their own conditions. Data source: SMM ◼ 4 Substitution Comparison: Cost-Effectiveness Competition between Lump Ore and Pellet Generally, when steel mill profits are favourable, steel mills consider increasing the usage ratio of lump ore and pellet. Typically, the combined usage share of lump ore and pellet ranges between 20%–30%. In actual ore blending decisions, steel mills' price spread analysis between lump ore and pellet falls into two categories: inland steel mills usually compare the price spread between domestic pellet and lump ore such as PB lump and Newman lump; while coastal port steel mills focus more on the price spread between imported pellet and corresponding lump ore. In recent years, with the increase in China's pellet capacity and the decline in imported pellet volumes, the weighting of price spread comparison between same-grade lump ore and domestic pellet has further increased. Historical data showed the price spread between 62% grade pellet in Qingdao and PB lump ore at Qingdao port ranged approximately 40–260 yuan/mt, with an annual average price spread of approximately 108 yuan/mt in 2025. Considering steel mills' actual cost accounting, the price spread equilibrium point between pellet and lump ore is generally set at 120 yuan/mt. When the pellet-lump price spread exceeds 120 yuan/mt, lump ore offers better value; When the pellet-lump price spread falls below 120 yuan/mt, pellet offers better value. Steel mills can choose accordingly based on their own raw material conditions, logistics structure, and production requirements. Data source: SMM Carbon Neutrality as a Two-Way Driver: Steel Industry Restructuring Shifts Iron Ore Demand ◼ The rapid advancement of industrialisation has significantly intensified the impact on the global climate, making the urgency of achieving carbon neutrality increasingly pressing. Particularly over the past five years, major economies represented by China and the EU have not only defined their respective emission reduction targets but also successively introduced legally binding regulations, marking a shift in global climate governance from consensus to action. Going forward, China's Ecological Environment Code and the EU's European Climate Law and "Fit for 55" package will become the two major institutional benchmarks for global climate governance. China's carbon market and the EU's CBAM, from the two dimensions of domestic carbon pricing and cross-border carbon adjustment respectively, form core policy tools for effectively controlling carbon emissions. Source: SMM ◼ Driven by both domestic and international legislation, the steel industry will undergo an evolution in emission reduction pathways: process transformation from long-process to short-process steelmaking; low-carbon transition driving non-blast furnace ironmaking development and carbon constraints driving furnace charge structure upgrades. These pathways will collectively reshape the demand structure of iron ore, manifested as strengthened preference for high-grade, low-impurity iron ore concentrates and premium mainstream ore types, while demand for traditional sintering fines tends to narrow. ◼ 1. Process restructuring: the shift from long-process to short-process steelmaking will drive increased demand for mainstream varieties and high-grade ore Under the global backdrop of "carbon neutrality" goals, the steel industry is regarded as one of the key areas for industrial emission reduction. The traditional long process (blast furnace-converter process), due to its reliance on coke and iron ore, is considered a major source of high carbon emissions and has become a key target for regulation and transformation. Many countries have begun shifting toward the more environmentally friendly short process (steel scrap-electric furnace process), but this transition has been relatively slow in China. On one hand, electric furnace steelmaking is largely limited to rebar production; on the other hand, steel scrap supply is constrained. Additionally, considering factors such as melting costs and losses in steel scrap smelting, pig iron costs should be higher than steel scrap prices by 100-150 yuan/mt for steel scrap to be more cost-effective; if the price spread is below this level, pig iron offers better value. In 2025, the price spread between hot metal costs and steel scrap fluctuated in a range of -100-210. Pig iron costs were mostly more favorable than steel scrap, so the share of blast furnace steelmaking in China stayed high. Source: SMM In China, apart from profitability, short-process electric furnaces are also constrained by high electricity prices, steel scrap price fluctuations, and cost disadvantages , resulting in slow capacity growth. Although the national carbon market is already operational, current carbon prices have not been effectively incorporated into trading, which is not enough to drive a large-scale shift from long-process to electric furnaces, and enterprises mostly adopt gradual adjustments . Source: SMM Based on current policy and market conditions, before China's steel industry is formally included in the national carbon market trading and during the early stage of the EU's CBAM policy implementation, the blast furnace-converter long process will remain the dominant mode of global steel production over the next five years. However, under the dual pressures of domestic steel capacity capping and rising carbon prices in the future, China's electric furnace short process is entering a historic development opportunity, with its share of steelmaking set to gradually increase. By 2030, the share of electric furnace steelmaking is expected to reach around 35%. In the long term, this trend will gradually suppress iron ore demand, causing it to weaken. Against the backdrop of oversupply, competition among iron ore varieties will intensify, and therefore high cost-effective varieties with low silicon and aluminum content will become the optimal choice for steel mills. Undoubtedly, mainstream medium and high-grade ore such as PB fines, Mac fines, Newman fines, IOCJ fines, BRBF, and Simandou fines all belong to relatively high-quality varieties. ◼ 2 Low-carbon transition driving non-blast furnace ironmaking development, demand for high-grade iron ore concentrates with Fe content above 65% expected to continue rising Currently, global DRI production accounts for only 10% of total global production. As low-carbon technologies such as hydrogen-based DRI accelerate in application, DRI production share is expected to rise to 13% by 2030. In comparison, China's non-blast furnace ironmaking share is even smaller, with mass production not yet achieved and only leading steel enterprises in the trial production stage. Under current carbon neutrality requirements, China's non-blast furnace ironmaking is facing significant development opportunities. According to incomplete statistics, announced non-blast furnace ironmaking capacity totaled approximately 18 million mt, of which only 2 million mt were under construction, with the remaining 16 million mt of projects still in early stages, carrying relatively high risk coefficients. Whether these projects materialize depends on multiple factors including funding, market conditions, decarbonization policies, and government support, resulting in significant uncertainty regarding future commissioning time. Future projects will primarily be gas-based; current major DRI equipment uses coke oven gas (COG), but in the medium and long-term will gradually shift to green hydrogen. Data source: World Steel Association Data source: SMM Currently, the core requirements for DRI raw materials are "high grade, low impurities," with Fe grade ≥66% and SiO2+Al2O3 ≤3.5%. China's concentrates generally have relatively high silicon content, with some exceeding 10%. Therefore, only a few low-silicon concentrates can be used to produce direct reduced pellet feed. Ex-China high-grade concentrates offer a wider range of options. Data source: SMM As DRI production grows, demand for high-quality iron units is also increasing, leading to a structural rise in the share of high-grade iron ore and pure iron raw materials. As shown in the chart, varieties within the red box all have Fe content above 66%, with Si+Al content around 3.5%; these include some high-grade iron ore concentrates from China, Brazilian pellet feed concentrates, Peruvian concentrates, and emerging Simandou fines, all of which can serve as DRI raw materials. Data source: SMM ◼ 3. Carbon constraints drive furnace charge structure upgrades, with pellet replacing sinter becoming key to carbon reduction, and pellet-making concentrates with grades above 62% set to see significant growth. As China's steel industry pursues structural adjustment, optimization, and green, low-carbon, high-quality development, pellet ore as a premium raw material for blast furnaces has been increasingly favoured by the industry, driving the rapid development of the pellet sector. The energy consumption of the pellet production process is approximately 50% of that of the sinter production process. According to CISA's 2025 statistics, the average energy consumption of the sintering process among its member units was 48.5 kg/mt, while the average energy consumption of the pellet process was 25.23 kg/mt, indicating lower energy consumption in pellet production. Due to the different heat supply methods in pellet roasting compared to sintering, SO2, NOX, and CO2 emissions after combustion are much lower than those from the sintering process. In addition, pellet ore generates much less dust than sinter, making the pellet process more environmentally friendly. The emission comparison between the sintering process and the pellet process is shown in the chart below: Data source: SMM ◼ A high proportion of pellet ore in furnace charge is the direction and demand of current blast furnace charge structure development Compared with other countries in the world, China's blast furnace charge structure is dominated by sinter with a low pellet ratio , while blast furnaces in North America and Europe primarily use high proportions of pellets, with some blast furnaces reaching 100%. For example: SSAB's blast furnace in Sweden had a pellet ratio of 97.2%, Dofasco in Canada achieved 100% all-pellet smelting, and USS No. 14 blast furnace had a pellet ratio of 80%, etc. According to CISA's 2025 statistics, the average fuel ratio per unit of ironmaking at China's key steel enterprises was 523-525 kg/mt, approximately 70 kg higher than the average fuel ratio of European and American blast furnaces. The reason is that China's blast furnace charge is dominated by sinter, with sinter iron grade at around 54-57%, while pellet ore iron grade is above 62%. High sinter usage leads to high slag volume and high energy consumption in blast furnaces. Therefore, against the backdrop of carbon reduction, increasing the proportion of pellet ore usage is imperative. Data source: SMM ◼ Currently, there are three main types of pellet production equipment in China: shaft furnaces, chain grate-rotary kilns, and travelling grates . In recent years, pellet equipment with a single-unit capacity below 1.2 million mt/year (excluding ferroalloy and foundry pig iron pellets) has been classified as a restricted category; therefore, capacity replacement of pellet equipment continues, with new pellet projects predominantly using travelling grates, with single production line capacity mostly at 5 million mt. As a result, current pellet production is mainly based on rotary kilns and travelling grates. These two types of equipment have less stringent raw material requirements compared to shaft furnaces, allowing the blending of multiple ore types such as magnetite, hematite, and limonite. However, it must be concentrate, with a particle size requirement generally of -200 mesh, 70% or above. Commonly used varieties include: domestic concentrate, Ukrainian concentrate, Brazilian concentrate, Middle Eastern concentrate, Chilean concentrate, Australian concentrate, Sierra Leonean concentrate, etc. As the proportion of pellet usage increases in the future, demand for concentrate with grades of 62% and above will continue to expand. ◼ Overall, before 2030, as carbon neutrality policies and Europe's CBAM are still in the early stages of implementation, carbon emission costs have not yet become significantly prominent. Meanwhile, China's steel production is trending downward, while iron ore supply is accelerating, steel mill profits are under pressure, and cost reduction and efficiency improvement remain the industry's mainstream strategy. Therefore, procurement will continue to focus on low- and medium-grade iron ore, demand for non-mainstream ore varieties will remain robust, the price spread among high-, medium-, and low-grade ore will be difficult to widen, and premiums for lump ore and pellets will also stay at current low levels. ◼ After 2030, market requirements for green steel will gradually increase, the share of electric furnace steelmaking and non-blast furnace steelmaking will rise, and overall iron ore demand will decline notably. Although blast furnace capacity will decrease, operating rates may improve, driving down sinter demand while pellet demand increases significantly. This shift will lead to a sharp decline in fines demand and an expansion of market share for mainstream medium-grade ore; meanwhile, demand for high-quality concentrate will rise, pushing the price difference between high and medium-grade ore wider, and pellet premiums will also continue to climb. Additionally, although lump ore demand has some growth potential, the increase will be limited under carbon emission constraints, and lump ore premium elasticity will diminish accordingly.

Inter-product price spreads are a segment of the rebar spread system characterized by complex logic and abundant trading opportunities. Unlike the spot-futures price spread, which reflects the spot-futures structure, and calendar spreads, which reflect near- and far-term expectations, the core of inter-product price spreads lies in macroeconomic structural adjustment and profit distribution across the industry chain. From the perspective of the industry chain, inter-product price spreads for long steel products are mainly concentrated in the following four areas:

[SMM Cast Aluminum Alloy Futures Review] The most-traded cast aluminum alloy futures contract 2602 opened at 21,215 yuan/mt today. After opening, the price initially rose slightly before entering a phase of fluctuating rangebound and pulling back, during which it touched the intraday low of 21,130 yuan/mt. During the session, it rebounded quickly from the low and then shifted to fluctuating rangebound, with the center gradually rising above the intraday moving average. Toward the close, the price surged again and continued to climb, hitting a new intraday high of 21,485 yuan/mt, and finally settled at 21,480 yuan/mt, up 215 yuan/mt or 1.01% from the previous trading day. Bears mainly reduced their positions in the futures market.

View SMM Aluminum Product Quotes, Data, and Market Analysis SMM May 29: The most-traded SHFE aluminum 2507 contract opened at 20,105 yuan/mt today, hitting a high of 20,140 yuan/mt and a low of 20,005 yuan/mt, before closing at 20,070 yuan/mt, down 0.20%. Trading volume stood at 111,000 lots, while open interest reached 196,000 lots. SMM Review: Macro perspective, the domestic positive sentiment remains unchanged, while overseas macro uncertainties persist. Fundamentals side, short-term aluminum market supply remains stable without significant changes. According to SMM statistics, Guangdong's aluminum ingot inventory reached 212,000 mt on May 30, Wuxi's stood at 132,000 mt, and Gongyi's totaled 46,000 mt, bringing the combined inventory across these three regions to 390,000 mt, down 4,000 mt WoW. Cost side, price fluctuations triggered by earlier bauxite supply disruptions in Guinea have gradually eased, while spot alumina price increases have slowed markedly. As alumina producers' profit margins improve, some companies are expected to resume production, which may impact future market supply. Demand side, although some industries have shown signs of off-season weakness, the overall decline is better than expected, with demand resilience remaining. Overall, the unexpected decline in domestic aluminum ingot inventory has provided support for aluminum prices and spot premiums. However, the lack of macro-level positive surprises recently has made it difficult for aluminum prices to rise further. Meanwhile, off-season pressure on the demand side has also limited the upside room for aluminum prices to some extent. Therefore, aluminum prices are expected to fluctuate rangebound in the short term. The most-traded alumina 2509 contract opened at 2,955 yuan/mt today, reaching a high of 2,973 yuan/mt and a low of 2,930 yuan/mt, before closing at 2,962 yuan/mt, up 0.27%. Trading volume reached 246,000 lots, while open interest stood at 320,000 lots. SMM Review: This week, alumina operating capacity continued to rebound, up 1.46 million mt/year WoW to 86.67 million mt/year, further easing spot supply pressure and slowing spot price gains. Overseas alumina trading remained sluggish recently, with relatively small price fluctuations. As domestic prices continue to rise, alumina imports have turned profitable, with the import window gradually opening. In the short term, as some alumina production cuts resume operations, supply pressure is expected to ease further. The alumina industry's average profit has entered positive territory, and market expectations for production resumptions remain strong. Alumina futures prices pulled back first, which may lead to weaker spot prices. Going forward, close attention should be paid to domestic alumina producers' capacity changes and imported alumina supply conditions. [The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Clients should make decisions cautiously and should not replace their own independent judgment with this information. Any decisions made by clients are not related to SMM.]

View SMM Aluminum Product Quotes, Data, and Market Analysis SMM May 24: Last night, the most-traded SHFE aluminum 2507 contract opened at 20,175 yuan/mt, hitting a high of 20,175 yuan/mt and a low of 20,075 yuan/mt, before closing at 20,175 yuan/mt, up 0.05%. Trading volume stood at 56,000 lots, with open interest at 204,000 lots. SMM Review: Macro front, the US dollar index rose 0.33% overnight to 99.94. The US House of Representatives passed President Trump's large-scale tax and spending cut bill. On Thursday, US Fed Governor Christopher Waller stated that if the Trump administration maintains tariffs on US trading partners at around 10%, the Fed may begin interest rate cuts in H2 2025. Fundamentals side, short-term supply-side changes remain relatively small. Cost side, the specific impact of the Guinea incident on local bauxite supply awaits assessment, potentially providing short-term sentiment-driven cost support for alumina. Demand side faces dual pressures of domestic seasonal weakness and trade uncertainty, with short-term operating rates at aluminum processing enterprises continuing to decline under pressure. Subsequent focus will be on whether downstream export orders can genuinely improve and offset weakening domestic demand expectations. Overall, current low inventory provides support for aluminum prices, but the lack of macro catalysts beyond expectations to further drive prices this week, coupled with off-season demand-side pressures limiting upside room, suggests spot aluminum ingot in mainstream consumption areas will face weak supply and demand. Short-term aluminum prices are likely to fluctuate rangebound, with attention on domestic and overseas demand performance, month-end inventory trends, and bauxite supply disruptions. Last night, the most-traded alumina 2509 contract opened at 3,150 yuan/mt, reaching a high of 3,170 yuan/mt and a low of 3,102 yuan/mt, before closing at 3,103 yuan/mt, down 2.42%. Trading volume was 660,000 lots, with open interest at 390,000 lots. SMM Review: This week saw maintenance at some enterprises in north China, while some alumina refineries in south China completed maintenance, leading to a rebound in operating capacity. Nationwide operating capacity increased by 1.09 million mt WoW. In the near term, new alumina enterprises are scheduled for maintenance, while some are expected to complete maintenance and resume operations, suggesting overall operating capacity will continue to rebound slightly. Amid bauxite supply disruption news, rising bauxite prices are expected to strengthen alumina cost support, coupled with a short-term fundamentals yet to shift to surplus, maintaining upward momentum. However, with supply recovery, alumina price gains may face resistance, likely holding up well in the short term. [The information provided is for reference only. This article does not constitute direct investment research advice. Clients should exercise caution in decision-making and not use it to replace independent judgment. Any decisions made by clients are unrelated to SMM.

[SMM Daily Review: Steady Performance of Cobalt Sulphate Spot Price on May 16] The SMM cobalt sulphate index price was 49,079 yuan/mt, down 17 yuan/mt from the previous working day. The spot price of cobalt sulphate ranged from 48,400 to 50,000 yuan/mt, with an average price of 49,200 yuan/mt, unchanged from the previous working day. Supply side, smelters of cobalt salt have slightly loosened their quotations recently. Demand side, downstream enterprises are still dominated by wait-and-see sentiment, and cobalt sulphate transactions have been extremely mediocre recently.

【SMM Review】Lead concentrate imports in March 2025 reached 116,000 mt, up 14.18% MoM and up 59.69% YoY.

View SMM Aluminum Product Quotes, Data, and Market Analysis SMM April 17 News: Today, the most-traded SHFE aluminum 2506 contract opened at 1,635 yuan/mt, with a high of 19,720 yuan/mt, a low of 19,625 yuan/mt, and closed at 19,645 yuan/mt, up 0.05%. The trading volume was 97,300 lots, and the open interest was 218,000 lots. SMM Review: On the macro front, yesterday, the US White House imposed a tariff hike of 245% on certain Chinese goods, to which China responded with indifference. Although the market expressed concerns, there was no widespread panic. Recently, due to the tariff issue, both US inflation and unemployment rates have risen. Under dual pressure, Fed Chairman Powell stated that more definitive data is needed before considering the next interest rate cut, leaving the monetary policy outlook uncertain. On the supply side, although the operating capacity of aluminum increased in April, the domestic capacity ceiling limited significant growth. Weekly aluminum ingot inventory dropped sharply by 35,000 mt, and the accelerated destocking continues to provide strong support for the bottom of aluminum prices. On the demand side, the market showed a wait-and-see sentiment under the tariff impact, but new orders from end-users increased slightly after the aluminum price decline, and the purchasing power of processing enterprises rebounded, with aluminum outflows from warehouses performing well. Overall, the rebound in non-ferrous metals was supported by easing macro sentiment, and the continuous destocking of aluminum inventory underpinned aluminum prices. In the short term, aluminum prices maintained a fluctuating trend, and future attention should be paid to tariff policy adjustments and the export situation of aluminum semis and end-users. Today, LME aluminum inventory decreased by 2,825 mt or 0.65%, and the accelerated destocking continues to provide strong support for the bottom of aluminum prices. On the demand side, the market showed a wait-and-see sentiment under the tariff impact, but new orders from end-users increased slightly after the aluminum price decline, and the purchasing power of processing enterprises rebounded, with aluminum outflows from warehouses performing well. Overall, the rebound in non-ferrous metals was supported by easing macro sentiment, and the continuous destocking of aluminum inventory underpinned aluminum prices. In the short term, aluminum prices maintained a fluctuating trend, and future attention should be paid to tariff policy adjustments and the export situation of aluminum semis and end-users. Today, the most-traded SHFE alumina 2509 contract opened at 2,872 yuan/mt, with a high of 2,910 yuan/mt, a low of 2,872 yuan/mt, and closed at 2,884 yuan/mt, up 0.45%. The trading volume was 130,000 lots, and the open interest was 168,000 lots. SMM Review: Due to the concentrated maintenance of alumina refineries in April, the operating capacity of alumina continued to decline, dropping to 82.88 million mt/year this week. The tightening of alumina supply in the short term slowed the decline in alumina prices, and there was a slight rebound in northern alumina prices. However, as maintenance gradually ends and new capacities come online, the operating capacity of alumina is expected to rebound, and the expectation of a looser alumina supply remains. In the short term, alumina prices may enter a phase of fluctuating adjustments. [The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not use this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

[SMM Review: What Impact Will the Resumption of Myanmar Ore Imports Have on the Rare Earth Market?] On March 26, the Kachin State government announced that the legally mined and long-stored rare earth in the eastern province mining area would officially be exported starting from March 27, 2025. Previously, the control of the mining area by the Kachin Independence Army had led to a halt in rare earth mining and border closures, severely affecting the supply of medium-heavy rare earth. The Kachin State government's legal release of the stored rare earth may alleviate the tight supply situation in the market in the short term.

[SMM Steel Import and Export Data Review] Cumulative Steel Exports in January-February Remain High YoY, External Pressure May Lead to a Decline in March? According to the latest SMM survey on steel mill export schedules, the planned export volume for February decreased by 4.7% compared to the actual export volume in January. Although overseas supply and demand conditions have improved, providing a positive outlook for China's exports, it is worth noting that starting March 8, Vietnam will impose a provisional anti-dumping duty of 19.38-27.83% on Chinese HRC. Vietnam is China's largest steel export destination, and sanctions on Chinese steel products from South Korea, India, and the US are increasing. Additionally, based on the SMM survey, some export traders are currently facing bottlenecks in taking orders. Therefore, SMM expects that steel exports in March may decline compared to this month...