Five factors affect iron ore price trend
According to industry analysis, later iron ore prices will be in a rational range, there are the following 5 factors to support.
First, the overall trend of China’s steel production in the future will be stable in the trend of decline, the demand for iron ore has decreased, which determines the late iron ore price can not rise significantly. On April 19, the National Development and Reform Commission (NDRC) said that in 2021, with the joint efforts of all relevant parties, the country’s crude steel output will be reduced by nearly 30 million tons year-on-year, and the reduction task of crude steel output will be fully completed. To maintain the policy continuity, stability and consolidate the good results of crude steel production reduce, in 2022, the National Development and Reform Commission, Ministry of Industry and Information Technology, ecological environment, the National Bureau of Statistics will continue to carry out the national crude steel production, reduce work boot steelmakers rejected quantity way of extensive development, promote the development of high quality iron and steel industry. Therefore, this year’s domestic crude steel output will continue to reduce. Csa statistics show that in the first ten days of May, the average daily pig iron output of key steel enterprises was 2,031,700 tons, down 0.47% compared with ten days, down 1.44% year on year; The daily crude steel output was 2,305,200 tons, down 2.26% from the previous ten days and 4.65% from the previous year. The average daily output of steel was 2.162 million tons, down 5.73% from last ten days and 5.68% from last year. Due to the recent losses of some iron and steel production enterprises, significantly reduce the willingness to quickly release capacity. China’s steel production continues to decline, iron ore demand will also be reduced, but the iron ore market supply has increased, high inventory. As of May 13, iron ore arrivals from 45 major ports in China reached 20.92 million tons, up 1.2 million tons from the previous month. The pattern of “strong supply and weak demand” in the iron ore market is still the same, which to a large extent determines that the iron ore price will not rise significantly in the later period, or it will fall steadily and return to rationality.
Second, the effect of the country’s industrial policy is gradually emerging, reducing the dependence on imported ore, and promoting the rational price of iron ore. In recent years, the state has introduced a series of policies and measures to ensure supply and price stability for bulk commodities. In the steel industry, a series of measures have been taken to address the problem of high dependence on imported iron ore. For example, increase policy support for the development of domestic iron mines and improve the independent guarantee ability of iron ore. The Korea Iron And Steel Association also said, The Cornerstone Plan should be carried out in earnest, and the domestic iron ore development plan should be quickly implemented to local governments, companies, and projects. It is understood that during the “13th Five-Year plan”, China has vigorously explored iron ore resources, achieved greater results. “During the 13th Five-Year Plan period, China’s geological exploration industry development achievements – Geological prospecting achievements” shows that during the 13th Five-Year Plan period, China’s iron ore resources increased 855 million tons. This since the beginning of this year, domestic iron ore production continued to grow the situation has contributed to the role.
Third, promote the comprehensive utilization of scrap steel and other renewable resources, expand its raw material in iron and steel production instead of iron ore proportion. Recently, cSA said that it would put forward and clarify the key supporting enterprises and demonstration bases of scrap recycling and processing system as soon as possible, and coordinate to solve the key problems restricting the development of the system. Through the implementation of renewable resources efficient recycling projects, encourage cooperation between large steel and renewable resources processing enterprises, build integrated large steel and iron processing and distribution centers, and improve the utilization rate of renewable steel and iron resources.
Fourth, encourage the import of pig iron, scrap steel, billet and steel, will increase the amount of iron in the domestic circulation. On April 28, 2021, the Tariff Commission of The State Council issued the Notice on The Adjustment of Tariffs on Some Iron and Steel Products, making it clear that starting from May 1, products such as pig iron, crude steel, recycled iron and steel raw materials, ferrochrome and other products will be subject to zero temporary import tariff rates. Undoubtedly, the reduction of import tariffs on pig iron and recycled iron and steel raw materials is beneficial to stimulate the diversification of import sources of iron primary processing raw materials and weaken the monopoly right of iron in large international iron ore enterprises. In general, encouraging the import of pig iron and recycled iron and steel raw materials is conducive to ensuring the supply of steel resources and curbing the irrational rise of iron ore prices.
Fifth, severely crack down on the artificial speculation of iron ore prices, will effectively restrict the irrational rise of iron ore market prices. In the early stage, iron ore prices showed a continuous sharp rise in the abnormal phenomenon, the National Development and Reform Commission, the State Administration for Market Regulation, China Securities Regulatory Commission and other ministries and commissions took drastic actions, step by step, strictly controlled and investigated iron ore against the basic supply and demand of artificial speculation, including speculation by public opinion, futures speculation, hoarding and other behaviors. It is clear that the focus of overseas mining enterprises and domestic enterprises in developing mixed ore business must be on strengthening the service to the downstream and giving full play to the role of port inventory in ensuring resource supply. Beware of taking the port mixed ore as the cheap reserve base of iron ore and the frontier of price control, hoarding and pushing up the price of iron ore. This reflects the country’s determination to strictly control and investigate iron ore speculation in violation of supply and demand fundamentals, and will promote the “supply and stable price” of iron ore and other bulk resources.
Post time: May-25-2022