1. Report Summary - The probability of the divergence between domestic and foreign price trends of iron ore in 2025 is extremely low [4][28] - The supply and demand of iron ore will increase simultaneously in the coming months, with limited pressure to accumulate inventory, and the overall contradiction is not prominent [3][40] - For the arbitrage strategy of long domestic and short foreign, it can be implemented at any time; for the unilateral strategy, it is recommended to buy on dips instead of selling on rallies [6][50] 2. Key Points of Each Section 2.1. Tracking of Domestic - Foreign Price Spread Arbitrage - Futures basis convergence leads to the price convergence of the main contract of DCE iron ore futures and the spot price of imported iron ore [11] - The variable part of monthly import cost is approximately equal to the swap price multiplied by the exchange rate, resulting in the convergence of DCE iron ore futures and (swap price * exchange rate) [11] - The domestic - foreign price spread (DCE main contract - swap * exchange rate) is the observed indicator and actual position of the long domestic and short foreign strategy [11][21] - The historical periods of divergence in domestic - foreign price spread are 2021 Mar - Jul, Oct - Dec and 2022 Feb - Mar, mainly due to non - market factors leading to the weakness of DCE iron ore futures [14][15] - The probability of divergence between domestic and foreign price trends of iron ore in 2025 is extremely low because there is no strong demand for administrative production cut, and it is difficult for domestic production to lead to long - term losses of imports [21][28] 2.2. Outlook of Iron Ore Market in Summer - The demand is the dominant factor in the iron ore market. As of June 12, the daily pig iron output decreased slightly but remained at a high level, and it is expected to increase slightly until early August [29] - The blast furnace profit usually changes one month ahead of the pig iron output. Currently, the blast furnace profit of steel mills is still increasing, which is consistent with the increase in pig iron output indicated by maintenance data [31] - The cumulative global iron ore shipments in 2025 reached 68,170,000 tons, an increase of 104,000 tons year - on - year; the cumulative shipments from Australia and Brazil reached 55,854,000 tons, an increase of 351,000 tons year - on - year [34] - The overall inventory of domestic iron ore has been decreasing and started to accumulate slightly in June, with less pressure on inventory compared to last year [35] - The supply and demand will increase simultaneously in the coming months, with limited pressure to accumulate inventory, and the overall contradiction is not prominent [3][40] 2.3. Summer Strategy Recommendations for Iron Ore - The domestic - foreign price spread (DCE main contract - swap * exchange rate) tends to converge upward as the DCE main contract expires [50] - The historical reasons for the downward fluctuation of the domestic - foreign price spread are mainly non - market factors leading to the weakness of DCE iron ore futures [50] - The risk of DCE iron ore futures (domestic) being significantly weaker than the swap (foreign) lies in production cut of crude steel and abundant domestic production, which are unlikely to happen at present [50] - In terms of single transactions, the near - term can enter the market at any time; in terms of asset portfolio, referring to the annualized return, it can replace other arbitrage portfolios [50] - In terms of time, there is no need to time; it can also enter the market when the import profit (one of the tracking indicators) is low [50] - In the long - term, the supply and demand in 2025 will be in tight balance, the price center is difficult to decline significantly, and the trend of inventory accumulation is expected to form until the fourth quarter. It is no longer recommended to sell on rallies but more inclined to buy on dips. It is more cost - effective to start deploying long positions around $90 [50] - In the short - term, it is not expected to decline significantly as the time when pig iron reaches its peak and then trends downward is still far away; due to the rapid increase in supply, the fundamental of Sep contract of iron ore tends to weaken, so the upside is also limited. It is recommended to gradually establish long positions around 650 for far - term contracts, and sell out - of - the - money call options when the Sep contract is above 830 [51]