Iron ore import cost squeezes steel profit
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September 18 09:06:59, 2024
After the financial crisis in 2008, international miners accelerated the development of iron ore financialization, and international iron ore prices also rebounded sharply. For domestic steel companies whose profits have been pushed to the bottom line, they have already entered. Another war in the price of iron ore. "The double increase in international iron ore prices makes imported iron ore account for about 50% of the total cost, and the profits of enterprises are repeatedly compressed." A vice president of a steel enterprise in southern Henan told reporters. From $60 to $190 "After the crisis in the annual pricing negotiations in 2009, the import iron ore pricing model has changed again until it becomes today's quarterly pricing model and monthly pricing model. The price of the company's purchase of iron ore is also from 60 US dollars / ton rose to 190 US dollars / ton this year, the increase is surprisingly high, and the price changes are also the arbitrariness of international miners." A steel purchaser told reporters. The steel purchaser also said that the three major miners did not hesitate to control the output in order to raise the price, so that the domestic steel mills had to buy a lot of minerals from the spot market, and then the price of the agreement mine rose to the level of the spot mine price, due to the spot. The instability of the price of the mine may have a certain impact on the steel mill, and the company has to adopt a new long iron ore price. The data shows that 63.5% of the Indian mines in the first quarter of 2009 were around RMB 600/ton, and by 2011, 63.5% of the Indian mines had risen to RMB 1,380/ton, an increase of about 130%. A vice president of a steel enterprise told reporters that before 2008, imported iron ore had been following the annual pricing agreement, and the price volatility was relatively flat. The annual profit of the steel industry was more than one billion yuan, but after 2008, imported iron. The ore chaos is frequent, causing the price to double, which greatly squeezes the company's profits. The company's net profit has dropped by about 20% every year. In fact, as early as from the annual report of some steel companies in China, it can also be seen that the increase in the price of imported iron ore has brought pressure to steel enterprises. Valin Steel’s annual report last year stated that due to the sharp increase in the price of imported raw materials, the company’s loss in 2010 reached 2.6 billion yuan. Officials of the China Iron and Steel Association also said that the average sales profit rate of domestic key large and medium-sized steel enterprises in the first ten months of this year was only 2.91%. If the rare earth business of Baotou Steel was removed, the profit rate may be less than 2%. 77 large and medium-sized enterprises in the association statistics. Among the iron and steel enterprises, 8 enterprises suffered losses in July, with a loss of 10.4% and a loss of 815 million yuan. In the era of low profits in steel enterprises, due to the high price of raw materials, domestic steel enterprises are on the verge of loss, and steel companies have to increase the prices of steel products and shift the pressure of raw materials downstream. Previously, due to the reduction of imported iron ore purchases by domestic steel companies, the international mining price showed signs of decline. According to the joint metal network data, since September, the price of 63.5% of the Indian mines in Tianjin Port has dropped from 1360 yuan/ton to 11 The monthly price is about 1,000 yuan / ton. However, the good times did not last long, and the spot and futures prices of imported iron ore all rebounded slightly. The data showed that the price of PB powder (FOB) rebounded by about 23% on November 14; the spot price of PB powder (dry basis including tax) in Qingdao Port also increased by about 10%. Han Qing, general manager of Shougang, said that while the spot price of imported iron ore fell, the three major international miners unexpectedly offered to cut prices, but the price of iron ore was lowered by the three major miners, while domestic steel prices. It was also implicated to continue to fall, which made the steel enterprises face a full loss situation again. Finally, the two sides could only reach an agreement to set the iron ore price at around US$140/ton, which also prevented the steel price from falling further. In today's meager profit of steel companies, domestic steel companies seem to have lost their prices in the face of iron ore prices, and the price of iron ore is also linked to domestic steel prices. According to Lange Steel, in the short-term contract of iron ore and the weak steel market at home and abroad, steel prices have become the protagonist of the ups and downs of the price of minerals, especially the steel market in China, which affects the global iron to a considerable extent. Ore trading market. However, it is worth noting that the current steel market in China only affects the price of iron ore in the range of 120 US dollars to 200 US dollars, and the price of iron ore is still at a high level.