In addition to the epidemic, Brazil's supply was affected by the resumption of production in the discontinued mining areas, and the progress of increasing production in the northern mining areas was less than expected, so it was difficult to increase production suddenly. However, domestic pig iron production maintained a high probability of growth, and the supply and demand pattern remained tight in June. The potential rising space is tracked by the relative valuation of steel profit, scrap steel and hot metal price difference. Risk points need to pay attention to the seasonal weakening of terminal demand and the marginal inflection point of the Brazilian epidemic. Since May, the spot price of iron ore futures has continued to rise. So where does the rising power come from? How to interpret the future and track the potential upside? What indicators should be paid attention to at the risk points that may turn? In view of these market concerns, this paper will analyze them separately. Why did it skyrocket in May: changes in demand expectations and the stimulus of the Brazilian epidemic. Since the beginning of this year, the spot supply and demand of iron ore are still tight. But why did May, especially last week, suddenly break the upward trend? We believe that the core lies in two driving factors.

First, the terminal demand continued to be strong, which changed the demand expectation; Secondly, the recent accelerated fermentation of the Brazilian epidemic has further aggravated the market's concerns about supply. How will supply and demand change in the future? Brazil's shipments this year are lower than expected, not only because of the epidemic, but also because the resumption of production in the discontinued mining areas and the increase in production in the new mining areas are lower than expected, so it is difficult for Brazil's supply to suddenly recover during the year. At the same time, Brazil is a country in the southern hemisphere. Now entering winter is more conducive to the spread of respiratory diseases. The interference of epidemic situation on its production may be further amplified. On the demand side, domestic pig iron production and port dredging are expected to maintain growth, and the port inventory is expected to continue to drop to about1060,000 tons in June, maintaining a tight supply and demand pattern.

How to track the potential rise? However, coke and iron ore will continue to rise in the short term, which may continue to reduce the profit of steel mills and the spread of scrap iron. When the profits of steel mills are reduced to meager profits or even losses, the price difference between scrap steel and molten iron is at a low level, and the cost performance of scrap steel is improved, the demand for molten iron will be reduced. At this point, the upward momentum of coke and iron ore will be weakened, and the rise may come to an end. What are the potential risk points? We need to pay attention to the seasonal weakening of terminal demand, the marginal inflection point of the Brazilian epidemic, and whether the actual shipments in Brazil increase in the off-season. Risk factors: the epidemic situation in Brazil has turned to an inflection point, and the demand for steel products has declined seasonally. Since May, the spot price of iron ore futures has continued to rise. After breaking through the shock range of the first four months of this year, the increase last week was significantly expanded.