The depreciation of the U.S. dollar stimulates commodities, and iron ore prices will run at a high level.

The fundamentals resonate with the macro.

Since April, iron ore has shown strong gains. On the one hand, the international epidemic has interfered, and the market has increased concerns about the continued supply of iron ore. On the other hand, the weakening of the US dollar, coupled with factors such as low inventory and high demand at domestic ports, has kept iron ore rising so far. Looking ahead, although the supply of imported iron ore will remain at a high level and the exchange will increase deliverable varieties to adjust iron ore prices, the steady advancement of domestic infrastructure has stimulated iron ore terminal demand, and iron ore prices are expected to remain high.

Structural contradictions in inventory have intensified.

The current structural contradiction in port iron ore inventory has further intensified. Although the overall volume of iron ore imported from Australia and Brazil is at a high level, the total stock of iron ore at the port has increased significantly against the background of the month-on-month decline in the volume of the port. However, the stock of the mainstream variety of China Pin Australia has continued to decline , The market is in short supply, and the stock of Australian powder has further hit a new low, leading to prominent structural contradictions among various iron ore in ports. Moreover, due to the second outbreak of the Melbourne epidemic in Australia, the current shortage of Australian ore shipments is still sluggish. At the same time, the gradual resumption of work in countries around the world will also increase the demand for iron ore, which will make it difficult for the shortage of varieties to reach Hong Kong to rapidly increase. Before a complete turnaround, structural contradictions in port iron ore inventory will continue for a long time, which will continue to boost domestic iron ore prices.

Rigid demand remains strong.

The latest import data shows that my country’s total iron ore arrivals continue to increase. In July, my country imported 113 million tons of iron ore, a new monthly high. In the first seven months, iron ore imports were 660 million tons, a year-on-year increase of 11.8%. In addition, the current available days of imported iron ore inventory of large and medium-sized steel mills in China is at the medium and low level of the past five years. Various data indicate that domestic rigid demand for iron ore remains strong.

In the current complex international situation, fiscal policy continues to increase the size of infrastructure. This year, it plans to invest 3.75 trillion yuan in new local government special bonds, a substantial increase of 1.6 trillion yuan from last year. In addition, this year's special bonds will be mainly invested in the field of infrastructure construction, allowing part of the funds to be used as capital for infrastructure projects to leverage larger social capital investment. A conservative calculation can accelerate the growth of infrastructure investment by 8 to 10 percentage points.

From a fundamental point of view, structural contradictions in iron ore inventory will continue, and high steel production will stimulate iron ore demand. From a financial perspective, the weaker U.S. dollar stimulates the trend of commodities, and iron ore prices will continue to run at a high level in the future.