Steel mills accelerate purchase ore prices

The high inventory of steel mills, coupled with the stagnant steel market, forced steel mills to start buying iron ore.

On November 30, Director of Forest Purchasing Department of Raw Material Purchase Department of Tangshan Xinbaotai Iron and Steel Company told the reporter that taking imported iron ore as an example, even though the price is “cheap” compared to the mine, almost all the steel mills use the whole foreign mineral sintering, but Each steel mill still implements a restricted procurement policy.

"Because the price of steel is changed every day, the price of raw materials also fluctuates. We do not dare to increase our inventory to avoid losses." He said.

According to the "Xinhua-China Iron Ore Price Index" issued on November 29, as of Monday, China's iron ore stocks (25 coastal ports) in China's ports were 100.87 million tons, down 0.97% on a week-to-week basis. China's imported iron ore price index with a grade of 63.5% was 145, down by 8 units; the 58% grade iron ore price index was 117, down by 7 units.

With the advent of the traditional winter storage period, whether it is steel mills or traders, the purchasing power is still insufficient. This situation has naturally been seen by iron ore suppliers. Within this month, Vale, Rio Tinto and BHP Billiton also acknowledged that the bulk commodities market including iron ore is declining.

Million tons of stock market deadlock

"In fact, steel mills are not stockpiled in winter and they only see how much raw material is needed to buy raw materials. Otherwise, they are prone to losses." Director of New Baotai Lin told reporters that taking Xinbaotai as an example, the original purchase of iron ore was once. After the inventory is generally maintained about 20 days, it is now a two or three days to purchase.

“A lot of steel mills are approaching a loss and can only reduce production and reduce production. The original steel output of 7,000 tons a day is now reduced to about 1,000 tons a day, and the corresponding ore procurement requirements have also dropped substantially,” he said.

The decline in China's crude steel production is a direct cause of the declining demand in the iron ore market.

According to the statistics of the China Iron and Steel Association on November 28, the average daily output of crude steel of member companies was 1.484 million tons in the middle of November, and the average daily output of crude steel was estimated to be 1.637 million tons, which was significantly lower than the daily average of 210 in October. Ten thousand tons of output, creating a new low in output during the year.

The analysis of the steel spot trading platform of the national price monitoring fixed-point unit "Nishimoto Shinkansen" pointed out that since mid-October, there have been significant signs of a reduction in domestic steel mills. With the overall demand for terminal equipment sluggish, the reduction in output has eased the contradiction between supply and demand in the domestic steel market. In mid-November, domestic iron ore, scrap, billet prices rebounded.

In this wave of rebound, the price of 62% of India's fine ore recovered from the lowest at the end of October of 115-116 US dollars / ton (CIF) to 147-148 US dollars / ton (CIF). Domestic ore prices have also followed the trend of rising. The purchase prices of steel mills in the South China region have generally been raised by RMB 60-100/t.

But the good times are not long. On November 30, an ore trader told reporters: “For three weeks of rising time, prices have begun to go down again. The steel mills are very cautious in the entire process, that is, cheap transactions can be made and the number of purchases is small.” Since late November, as the price of steel fell again, the price of imported ore fell back. Some individual steel mills in eastern China even had a small amount of cargo, causing the price of 62% of powder ore in India to gradually fall back to US$141-143/tonne (CIF). ).

"Which port is full, like most foreign companies we sell, most of the funds come from **. By the end of the year, the high-value mines will not be sold or sold," said the trader.

The three major mines: look at the low world, watching high China?

The three major mines also saw a downward trend in the market. On November 17, BHP Billiton said: "Intensifying market volatility and uncertain economic outlook will weigh on commodity market sentiment, and customers are becoming cautious in managing inventory."

On November 28, Jose Carlos Martins, executive director of iron ore and strategy at Vale, the world’s largest iron ore supplier, also told the media that most of the time this year, iron ore prices will be around US$180/tonne. He “don't think that next year.” The price will exceed US$180/ton or fall below US$120/ton,” and expressed optimism about the increase in global steel consumption and production.

However, the Chinese industry does not agree with the trend of the iron ore market in 2012. Director of the forest of the new Baotai told reporters: “If US$180/t is too optimistic as a ceiling, it may be less than US$150/t.”

Martins' optimism still stems from the huge size of the Chinese market. He believes that the demand for steel in the western world is 15%-20% lower than before the financial crisis, but China is still the main growth force for steel consumption.

He also pointed out that when the price of iron ore falls to a low level of US$120/tonne, many high-cost Chinese domestic mines cannot continue to operate, and steel mills will be more inclined to purchase iron ore from abroad.

Another supplier, Rio Tinto, also held a similar view. In its recent investor seminar, Rio Tinto also acknowledged that the European debt crisis and the US debt crisis have caused pressure on the market sentiment, which has directly led to iron ore prices in recent months. The decline. However, at the same time, it is optimistic that the Chinese economy will maintain its strong growth momentum in the long term.

Rio Tinto announced that its iron ore output in the Pilbara region of Australia is expected to increase. As of the first half of 2015, the annual output of iron ore will reach 353 million tons, which is more than 20 million tons more than previously expected. And that the future annual iron ore supply eight years the company will increase by 100 million tons, China's demand for iron ore will reach the peak in 2030, while other countries, such as India, there will also be long-term demand gap.