26
2021
-
07
Prices plunged 17% and the iron ore market cooled!
On Friday, the most active iron ore contract on the Dalian Commodity Exchange fell about 10 per cent from last week, the biggest weekly decline since February 2020, and is now down 17 per cent from the record high hit in May.
On Friday, the most active iron ore contract on the Dalian Commodity Exchange fell about 10 per cent from last week, the biggest weekly decline since February 2020, and is now down 17 per cent from the record high hit in May.
Recently, the international iron ore giants BHP Billiton, Rio Tinto and Vale released their second quarter production reports, and the output of the three iron ore giants fell short of expectations.
Specifically, in the second quarter of this year, BHP Billiton's iron ore production was 72.8 million tons, down 4.2 per cent from the same period last year and up 9 per cent from the previous month; Rio Tinto's iron ore production was 75.9 million tons, down 9 per cent from the same period last year, shipped 76.3 million tons, down 12 per cent from the same period last year, and inventories were also reduced; Vale's iron ore production was 75.7 million tons, up 11.3 per cent from the previous month and 12 per cent, but it fell short of analysts' expectations of 78 million tons.
In addition to the lower than expected iron ore production, the iron ore supply side will also face many challenges in the coming months.
BHP said it would launch a "major maintenance" campaign in Port Hedland over the next three months. Port Hedland is BHP's main iron ore loading facility in Western Australia.
Port Hedland
Regarding the reasons for the decline in iron ore production in the second quarter, Rio Tinto said that it was mainly due to higher-than-average rainfall days in the western Pilbara, the shutdown of some mines caused by the launch of new alternative capacity projects, the availability of processing plants, and community cultural heritage Management and other factors, and said that the delivery of alternative mines in Australia will be delayed. As a result, iron ore shipments will be at the low end of its 0.325 billion -0.34 billion-ton guidance range.
At the same time, Vale also announced that the restart of several businesses has been delayed. Anglo American, on the other hand, cut its iron ore sales guidance, citing rail restrictions and the adverse impact on South Africa.
A series of bullish iron ore prices followed.
Nicholas Snowden (Nicholas Snowdon), head of base metals and commodities research at Goldman Sachs, said in an interview that the bull market in iron ore will not end soon. Snowden pointed out that although there are some signs of slowing steel demand growth in China, steel demand in other parts of the world and developed markets is unusually strong. At present, the market is very tight and the demand growth rate is still strong.
Wall Street analysts said that in the next few months, iron ore supply is still difficult to increase significantly, because the world's largest iron ore producer still needs to deal with a series of problems from project delays to bad weather. Iron ore prices after the market still has room to continue to rise, is expected to rise to $300 per ton.
However, the truth is quite the opposite.
On Friday, the most active iron ore contract on the Dalian Commodity Exchange fell about 10 per cent from last week, the biggest weekly decline since February 2020, and is now down 17 per cent from the record high hit in May.
CFR China North 62% Iron Ore Price Index Trend This Year
August's most heavily traded iron ore contract on the singapore exchange fell 0.2 per cent to $197.25 a tonne.
A benchmark 62 percent of iron ore fines imported by northern China changed hands Friday at $201.33 a tonne, down 0.5 percent from Thursday's close, according to Fastmarkets MB.
in stock prices for China's benchmark 62 per cent iron ore hit a six-week low of $209.50 a tonne on Thursday, according to Steel House.
Iron ore prices diveReasonWhat is it?What?
The main reason for the decline in iron ore prices is that the market is worried about increasing domestic efforts to reduce steel production, prompting steel mills to start cutting production.
According to the latest data released by the National Bureau of Statistics, the country's cumulative crude steel production from January to June 2021 was 0.5633 billion tons, up 12.9 percent year-on-year, but in June the country's crude steel production was 93.8752 million tons, down 5.6 percent year-on-year.
Liang Haikuan, a mid-term iron ore researcher at Founder, believes that the main reason for this round of decline is the recent re-fermentation of steel mills to limit production expectations. Major steel production provinces have successively stressed the need to complete the target of no increase in crude steel production during the year, triggering renewed pessimism in the market on the charge side.
Data source: National Bureau of Statistics, my steel network
On June 29, Anhui Province took the lead in holding a forum on the reduction of crude steel output, and on July 1, Gansu Province also set the target of this year's crude steel output reduction. In the following three weeks, crude steel reduction tasks in Jiangxi Province, Hubei Province and other provinces were also issued one after another. Recently, steel enterprises in Jiangsu Province have received a clear target that this year's output will not exceed last year's. Shandong Province has issued a notice clearly requiring that the annual output of crude steel production capacity should not exceed 76.5 million tons, and comprehensively consider the utilization rate of environmental protection energy consumption capacity and layout. Factors such as planning are used to reduce and determine the output control targets of each steel enterprise. Tangshan City will also implement a 30% production limit in the second half of the year. It is expected that the output of Hebei Province, the largest crude steel supply province, will also shrink.
With a number of major steel-producing provinces strictly controlling crude steel production in the second half of the year, where will iron ore prices go in the future?
Wind data shows that as of July 23, the total iron ore inventory of 45 ports across the country was 0.128 billion tons, and the total inventory increased for five consecutive weeks.
The research team of Shanghai Nonferrous Network said that recently, a number of steel mills have been overhauled one after another, the purchase of raw materials for steel mills has slowed down, and port inventories are expected to continue to accumulate. With the gradual expansion of the scope of production reduction of domestic steel enterprises, there is room for compression of iron ore demand in the future, and some steel enterprises increase the use of medium and low-grade ore, iron ore prices are still likely to decline.
Iron ore market, really should cool down!
Source: Mining Industry
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