Imported iron ore or the turning point of Chinese steel has a "breathing" opportunity
January 04 12:07:43, 2023
Recently, the downgrade of the US sovereign credit rating and the debt crisis in the Eurozone have spurred violent shocks in international and domestic financial markets. Affected by this, how the trend of iron ore, which has always been high, has become a topic of concern for the domestic steel industry. Analysts in the industry generally believe that the expected decline in imported iron ore is increasing, and domestic steel companies with heavy cost pressures are expected to have a chance to breathe. According to customs statistics, in the first half of the year, the average landed price of imported iron ore was 160.89 US dollars per ton, a record high, up by 47.92 US dollars per ton over the same period last year, an increase of 42.41%. In the first half of the year, imported iron ore was 332.25 million tons. Due to the sharp increase in import prices, foreign exchange expenditures were 16.01726 billion US dollars. According to the average exchange rate of RMB against the US dollar in the first half of the year, the cost of the steel industry was increased by 104.11 billion yuan. For a time, imported iron ore has become an "unbearable weight" in the Chinese steel industry. However, the recent price of minerals is likely to have an inflection point. Because of the turbulent performance of the international market, the bearish atmosphere in the domestic iron ore market has intensified. Although the overall market has not yet seen significant adjustments, the possibility of a downward trend in the iron ore market has greatly increased, and people are more concerned about how much the decline will occur once the market is lowered, and whether there will be a “plunge†market. On the above issues, the analyst pointed out that from the current market situation, the supply of domestically produced mineral resources is relatively limited, and the ability to “resist down†is strong. Since the beginning of this year, the domestic iron ore market price has remained at a historically high level. With the difficulty of mining in China, although the domestic raw ore production has hit record highs, the grade and quality of ore have declined to varying degrees, resulting in iron concentrate. Supply continues to be tight. As a result, in the domestic mining market, with the low supply of resources, the overall market may decline in stages, and the possibility of a big drop is unlikely. Compared with domestic iron ore, there are many factors that cause the price of imported ore to drop. The plunge in international crude oil prices has been synchronized with the depreciation of the US dollar, which has sounded the alarm for the import mine market. What is more noteworthy is that in the iron ore market, the supply of imported mineral resources has increased. The import of imported minerals in major domestic ports has been increasing, approaching 100 million tons, which shows the supply of imported mineral resources. Relatively abundant, it also paved the way for the market to a certain extent. “In addition, the China Iron and Steel Association will launch the “China Iron Ore Index†in October, which is likely to have an impact on international iron ore prices in the fourth quarter,†the analyst said. However, analysts also warned that the price of imported ore is more "affordable" due to factors such as the depreciation of the US dollar, especially in the case of a cumulative depreciation, the adjustment of the price of imported ore may have more room. However, in the case of the advantage of imported ore prices, it is likely to squeeze the domestic mining market share.