The continued shrinkage of Chinese iron ore imports has finally allowed the three major international mining giants to make concessions on iron ore prices. Recently, news from major domestic steel mills stated that the three major mines have all provided the latest price quotes for ore prices. In the fourth quarter, the overall ore prices decreased by more than 10% from the previous quarter.

In response, many analysts in the industry believe that the recent large-scale production restriction of the Chinese steel industry will further affect the demand for iron ore. The drop in the price of raw materials will not be able to support the steel prices that have soared recently due to limited production and power cuts.

Steel industry limited power production to promote ore prices down

The industry generally believes that the three major mines in the fourth quarter, the price is mainly due to the sharp decline in China's iron ore imports since the first half of this year. Data show that in the first half of this year, China’s imports of iron ore have dropped by 25.14% compared with the same period of last year. At the same time, since late August, with the acceleration of “energy saving and emission reduction” spurts in various provinces, the domestic iron and steel industry has restricted the production of electricity in a large area, and accordingly the demand for raw materials such as iron ore has dropped further. Therefore, the industry’s downward forecast for iron ore prices is very high. Big.

Zhou Wei, an analyst at the Iron and Steel Information Research Center, analyzed that if the 2010 annual pig iron production amounted to 587 million tons, 939 million tons of iron ore product ore would be needed. The impact of limited electricity production, China's iron ore production in 2010 is expected to be about 950 million tons of raw ore, China's need to import 507 million tons of iron ore will be able to meet the balance between supply and demand, and from January to July cumulative import of iron ore With 360 million tons of stone, the balance of supply and demand can be met only by importing 147 million tons of iron ore in China in the remaining 5 months. Since domestic steel production in August was not limited by electricity, it is assumed that the quantity of imported ore in August will be maintained in July. The level, starting from September, the average monthly monthly import of only 24 million tons of iron ore can reach the balance between supply and demand, in July 2010, China imported iron ore 51.2 million tons as a benchmark, then the remaining few In the month, the demand for imported ore in China will be reduced by at least 50%.

“Because of the supply and demand relationship, the price of iron ore will decline in the fourth quarter of 2010.” Zhou Yongdao.

It is reported that among the three major mines, Rio Tinto’s offer is FOB USD 127/ton, which is equivalent to CIF price of USD 137/ton; Vale’s quotation is FOB USD 135/ton, which is equivalent to the CIF price. It is US$161/tonne; BHP Billiton is starting at US$122 plus Shanghai freight, and the CIF price is US$133.

“The three major mines all have suspicions of competition in the quotation. This places a lot of pressure on the spot Indian mines, so today's powder fell to 148 US dollars, and still have to explore.” September 10, Steel Information Center Analyst Zhang Lin also pointed out in an interview with this reporter.

Reduce raw material costs is difficult to support steel prices rally

Some steel mills in Shanxi, Jiangsu, and Zhejiang provinces were required to cut production and suspend production, and Hebei, a major steel province, joined the ranks of limited power production. This was a surprise move to complete the “Eleventh Five-Year Plan” energy saving and emission reduction targets. Although it caused controversy by all parties, its stimulating effect on the once-slow steel price was very meditation.

According to the transaction monitoring data from the domestic steel spot trading platform Nishijin Shinkansen, the national steel price showed a general increase last week. Relatively speaking, the price rise of steel prices in East China ranks first, followed by steel prices in North China, and steel prices in South China are relatively stable. From the comprehensive price of 28 markets in the country, the price of rebar is 4,700 yuan/ton, and the price of wire rod is 4,500 yuan/ton, which is an increase of 150-400 yuan/ton from the market price in late August.

However, many market analysts believe that the fall in iron ore prices will exert downward pressure on the high steel prices. "If energy saving and emission reduction measures are implemented in all provinces and cities and steel companies cut production, the demand for ore will be reduced, ore prices will certainly fall, and the price of raw materials will fall. It is difficult to support the rise in steel prices." Zhou Yudao. However, Zhang Lin also said that if the power cut off lasts for a long time and 'for' reduction, it should be able to maintain the current steel price.

In fact, the price of the steel market in Beijing fell back from the previous day last Thursday after the sharp increase in steel prices last week. A steel dealer said that with the expectation of tight supply due to power shortages, the number of dealers with a wait-and-see attitude has gradually increased. “On the afternoon of the 7th, steel prices began to pull back, and shipments were not good. By the 8th, steel prices had already dropped by 100 yuan/ton. Now it is a two or three-day market, and we can only cut prices again.” said the dealer. .

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