However, just as iron ore spot prices and long-term price hikes have been reversed, international miners have hit the “save price†card and raised the price of imported iron ore, which is for the domestic steel enterprises that are already in the doldrums. Undoubtedly increased pressure. How to reduce pressure next will be the main issue facing Chinese steel companies.
Miners move to the spot market
From the beginning of June, the iron ore market entered a depressed state. Many people in the industry believe that the price of iron ore will fall to US$170/ton, but this is counterproductive. BHP Billiton’s 63.5% price of Newman fine ore fines has reached US$174.5 per ton. Caused speculation in the industry to follow up.
It is worth noting that while the price of iron ore is declining, the spot price and the long-term price have reversed.
According to the Platts Index, Rio Tinto's three-quarter long price of 61.5% PB powder ore fines is US$167.49 per dry ton, while spot CIFs of the same type are US$169.25 per dry ton, deducting about US$8 shipping charges. It was US$161.25/dry ton, and the difference was about US$6.
This is similar to the inverted phenomenon of the economic crisis in 2008. Many steel companies began to consider the spot market.
A person from a steel factory in Hebei told reporters that this time because of the inverted iron ore prices, many steel companies “turned†the iron ore spot market.
Union Metals analyst Hu Kai told reporters that the current spot price of iron ore is basically the same as the price of long associations. Many steel companies switch to the iron ore spot market, and after the long-term interest in the three major miners of the international mining industry loses their advantages, they also put A part of the iron ore in the hand gets the spot market to sell.
Hu Kai said at the same time that the three major international miners have taken iron ore to the spot market to sell, but at the same time, there are many methods. In addition to reducing the volume of shipments, they frequently use strong positions to carry out spot bidding, making domestic steel mills and trade. Businesses compete with each other, the highest bidder, and then achieve the purpose of pushing up the ore price.
The purpose of the three major miners seems to have improved, the current domestic spot prices of imported iron ore have begun to rise and fall, according to statistics, 63.5% of the mainstream price of Indian fines has risen to more than $ 180 / ton.
High inventory difficult to understand raw material demand
At the same time, the inventory of domestic iron ore ports has also been updated to the highest level in history.
According to a steel worker, due to entering the off-season phase of the steel market, domestic steel companies have also slowed their purchases of raw materials, and some steel mills are not in a hurry to pick up the goods, suggesting that the production pace of the latter steel companies has slowed down in the latter part of the period. With expectations of generally bearish prices, buyers are more cautious, maintaining low raw material inventory operations, which intensifies the extent of port trade deposits.
China United Steel Data shows that after entering June, the iron ore inventories of 34 ports nationwide reached a record high of 96.31 million tons, among which the inventory levels of the three major ore terminals in Qingdao Port, Rizhao Port and Caofeidian reached 1380 respectively. Ten thousand tons, 14.10 million tons and 10 million tons, all set record highs.
While importing iron ore at the same time, iron ore stockpiles of steel mills are also declining, demand for iron ore is starting to pick up, and international miners are constantly reducing shipments to the country, 6 The amount of imported iron ore in the month has been reduced by more than 2 million tons.
Hu Kai said that due to the fact that the price of long-term ore mines is very close to that of spot mines, and that the inventory is relatively high, it is expected that the iron ore import prices will remain at US$180/tonne in the short term.
An industry commenter said that in July the International Mining Association will reduce more shipments, coupled with the mill's own stocks are nearly depleted, the current high inventory is also difficult to support the domestic steel mills' demand for iron ore, if steel The factory does not accept the mine's price increase, and the port inventory will drop significantly.
Steel companies' profits have narrowed
According to the reporter's understanding, since the steel market entered the off-season, the price of steel products has been steadily declining. While major domestic steel mills have lowered their entry prices, they have issued corresponding policies to ease the sluggish operation. At this time, the three major miners have "planned" to push up the import price of iron ore, making domestic steel enterprises more difficult to survive.
An insider of a private steel plant in Hebei said: “At present, the price of steel is declining. The price of iron ore that should have been lowered has been pushed up by the three major mines, increasing the cost pressure at this stage and undoubtedly causing a fatal blow to domestic steel mills. Somehow, some steel mills will close down."
According to data from the Ministry of Industry and Information Technology, China imported 620 million tons of iron ore for the entire year of 2010. Due to the weighted average price of imported iron ore for the whole year of 128 US dollars per ton, an increase of US$40 per ton over the previous year, the steel enterprises The annual cost of imported iron ore rose by about 196 billion yuan***.
An insider of Hebei private steel mills stated that due to the extremely unstable iron ore prices, it is difficult for the company to make business decisions in a short period of time. Therefore, the steel mills have begun to reduce their own reserves of iron ore, which is also to reduce capital occupation. Avoid risks, and steel mills can only choose to use their own domestic mines when the import price of iron ore rises to 195 US dollars.
An industry source stated that the overall situation of China's steel industry is in the doldrums, not only the high prices of raw materials such as iron ore, but also the reduction of downstream market demand, tightening of macroeconomic policies, and tight credit funds, all of which will affect steel production. Industry profits.
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