The steel market is not the turning point. Iron ore prices are unlikely to drop next year

Many industry experts have stated that despite the current downturn in the steel market, iron ore prices have begun to fall, but there will be no reversal. The cost of iron ore will still fluctuate at high levels next year.

“Iron ore imports may still show a relatively strong situation. This year, the import of iron ore may be 660 million tons, and it may reach 720 million tons next year, which is about 9% year-on-year. The output of domestic ore will not be relatively Too optimistic, the output may reach 1.4 billion tons, which means that the year-on-year increase of about 8%. "My steel network analyst Ni Xianjuan said that for the next year, the global crude steel production is slowed down. This also puts relatively great pressure on the supply and demand of iron ore, so the entire ore price will remain a volatile situation next year, and the range is expected to fluctuate sharply from $120 to $180.

In this meeting, Zhou Xizeng, chief analyst of CITIC Securities, a chief analyst of CITIC Securities, also bluntly stated that the ore price cannot be reversed at once. He said that after researching abroad, he discovered that the increase in production capacity of foreign mines such as the three major mines was not as large as reported in the media. In recent years, the increase in production capacity has mostly been due to Chinese enterprises going out to purchase mines and some new mines such as FM G. . The iron ore grades of mines purchased by Chinese companies are generally around 40%. Although they are better than domestic ones, there is still a gap between them and overseas high-quality mineral products, and high-cost railway construction projects are required. Therefore, he believes that the price of iron ore in China cannot be reversed at once.

Since the beginning of this year, the price of steel products has experienced a sharp rise and then plummeted. At the same time, iron ore prices have also rapidly declined after soaring. There are indications that the steel industry has entered a very severe moment, not only that the profits of the industry have fallen to the freezing point, and that the steel industry has suffered losses. It is also expanding. China Iron and Steel Association statistics show that nine out of 77 steel companies lost money in September and increased to 25 losses after October. The loss area expanded to 32.5% and the loss amounted to 2.125 billion yuan, an increase of 1.83 billion yuan from September. .

Because of the market's decline, steel mills began to take the initiative to reduce production. According to statistics from the China Iron and Steel Association, domestic crude steel output fell to 54.67 million tons in October. According to data released by the China Iron and Steel Association, the maximum daily production from June was 2.018 million tons, and it decreased to 1.64 million tons in mid-November. On the other hand, iron ore prices began to return to rationality, from the highest point close to $ 200 per ton to the lowest point of $ 130 per ton.

However, many experts expressed their cautious attitude toward the "iron ore inflection point."

“Ore prices are only around 180 yuan/ton in 2000, but now they are more than 1,000 yuan/ton.” Qi Xiangdong, deputy secretary general of China Steel Association, said. He believes that the high cost of ore is related to the inflationary environment, which is caused by liquidity, that is, the amount of money put in. Although the industry expects China's CPI to be lower this year than next year, he fears that the introduction of currencies in Europe and the United States will trigger inflation again. Therefore, he believes that the factors that have caused high costs for steel companies have not been eliminated.

Jia Liangqun, chief analyst of my steel network, told the “Economic Information Daily” reporter that the pressure on ore may be due to the decline of steel output in the later period. However, this does not mean that it is a turning point, which means that iron ore supply will be oversupply next year. What was shown during this period of time was relatively loose.

Jia Liangqun frankly stated that December, January and February are the highest probability of price increases. A new balance is being created now, due to the low season of consumption and the expectation that global economic growth is not optimistic. In particular, there is a major domestic concern for the real estate market. The steel market will shake bottomed out under the major influence of the fierce fluctuations in the financial market. Once the economy recovers in the second half of next year, the pattern of ore will change again.

It is worth noting that the investment in the iron and steel industry has witnessed a marked growth. From January to October this year, the investment in fixed assets for ferrous metal mining was 476.52 billion yuan, a year-on-year increase of 18.5%. Among them, the selection of ferrous metal ore increased by 17.4% year-on-year. In the same period last year, the growth rate was 20.8%, and the growth rate dropped by 3.4 percentage points. The mining, smelting and processing of black metal ore increased by 18.9% year-on-year. In the same period last year, the growth rate was only 1.6%. The year-on-year increase was 17.3 percentage points. This shows that the iron and steel industry still has the phenomenon of expansion of production capacity, and the situation of oversupply of steel products will further deteriorate.

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