China Steel Association: There is still room for downside iron ore prices in the later period

August 28, 2019

Abstract Due to the low steel price operation and the continuous decline of steel output, the domestic iron ore market demand growth is weak, and iron ore prices are declining. At present, the oversupply situation in the iron ore market has not changed significantly, and there is still a certain room for decline in the later prices. 1. China's iron ore price index by...
Affected by the low steel price operation and the continuous decline of steel output, the domestic iron ore market demand growth is weak, and iron ore prices are declining. At present, the oversupply situation in the iron ore market has not changed significantly, and there is still a certain room for decline in the later prices.

1. China's iron ore price index has turned from rising to falling

At the end of January, the China Iron Ore Price Index (CIOPI) was 421.72 points, down 26.56 points month on month, a decrease of 5.92%. Among them: the domestic iron ore price index was 347.81 points, down 8.50 points, down 2.39%; the imported iron ore price index was 451.76 points, down 33.91 points, down 6.98%.

From the perspective of the whole month, the average price index of China's iron ore is 438.54 points. The domestic iron ore price index is 351.61 points, and the imported iron ore price index is 473.88 points.

Second, the price of imported ore has dropped more than domestic mines.

At the end of January, the domestic iron concentrate price was 894.99 yuan / ton, down 21.87 yuan / ton from the end of December last year, a decrease of 2.39%; the imported iron ore (fine ore) land price was 122.67 US dollars / ton, down 8.51 US dollars from the previous month. / ton, a decrease of 6.49%. The equivalent RMB price was 876.21 yuan/ton, down 60.39 yuan/ton from the previous month, a decrease of 6.49%. Imported ore prices have fallen more than domestic mines.

In January, the average price of domestic iron concentrate was 904.76 yuan / ton. From the situation of the whole month, the fluctuations fluctuated from January 2 to 15, and the decline from January 16 to January 21 increased. It remained stable from January 22 to 30; the average iron ore (fine ore) was imported. The price is 127.99 US dollars / ton, equivalent to the renminbi price is 914.07 yuan / ton. From the situation of the whole month, it rose in early January. It reached a full-month high of 954.85 yuan/ton on January 3 and continued to fall. It reached a monthly low of 874.17 yuan/ton on January 23. From January 24th to 30th, there was a narrow fluctuation trend.

Third, the analysis of iron ore price trend in the later period

As the domestic market entered the low season of demand, steel prices continued to fall, steel production also showed a downward trend, and iron ore demand intensity fell further. In the later period, the iron ore market is still in a situation of oversupply, and iron ore prices still have a certain downside.

1. Steel production continues to decline and iron ore demand intensity weakens

According to the National Bureau of Statistics, the domestic crude steel output fell to 201.14 million tons in December last year, the third consecutive month of decline, compared with the cumulative reduction of 169,400 tons in September, a decrease of 7.77%. Since the beginning of this year, according to the statistics of the Iron and Steel Association, in the first half of January, the daily average output of crude steel of the steel association members was 1,664,200 tons, which was 2.49% lower than that of December last year. The national crude steel output is expected to be 1,996,900 tons, down 0.72% from December last year. The demand intensity of iron ore continues to decline, and the demand situation in the later period is unlikely to change significantly.

2. The situation of iron ore supply exceeding demand is difficult to change.

According to the National Bureau of Statistics, in 2013, the cumulative production of pig iron in the country was 708.97 million tons, an increase of 41.64 million tons, an increase of 6.24% year-on-year, equivalent to an increase in demand for iron ore (finished ore) of about 67 million tons. In the same period, the output of domestic iron ore (raw ore) was 1.45 billion tons, an increase of 131 million tons (approximately 40 million tons of synthetic minerals), an increase of 9.94% over the same period of last year. According to customs data, in 2013, the country imported 819 million tons of iron ore. It increased by 75.81 million tons year-on-year, an increase of 10.19% year-on-year. The increase in iron ore resources far exceeds the demand for domestic steelmaking pig iron production; at the end of January, the inventory of imported iron ore ports was 98.12 million tons, an increase of 9.5 million tons from the previous month, an increase of 10.72%, an increase of 23.16 million tons over the same period of last year. 33.04%. The supply of iron ore continues to rise, and it is difficult to change the situation of oversupply in the iron ore market in the later period.

3. Iron ore prices are still relatively high, and there is still downside in the later period.

According to the statistics of the Iron and Steel Association, in 2013, the accumulated profits of member steel enterprises reached 22.886 billion yuan, turning losses into profits, but the sales profit rate was only 0.62%. After deducting investment income and other non-steel income, the steel industry is still on the verge of loss. Last year, the average CSPI China steel price index was 102.76 points, down 8.60% year-on-year, while the price of imported iron ore was $129.03/ton, up by 0.28 US dollars/ton, up 0.22%. At the end of January this year, the steel company CSPI China steel price index was 97.65 points, down 1.50% from the previous month, and the fourth consecutive month was lower than the April 1994 level, the lowest level since May 2009. Although the price of imported iron ore has also declined in January, the price of imported iron ore is still relatively high in the case of falling steel prices, and there is still room for downside in the later period.

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