Steel mills restricted production of iron ore imports rose

One side is the production ban, while steel mills and traders continue to increase raw material stocks. In September, China's iron ore imports increased significantly from the previous month. Analysts believe that despite the unfavorable micro conditions of the steel industry, the market is still bullish on the potential for supplementation of steel product prices due to increasing inflation expectations at the macro level.

According to preliminary data released by the General Administration of Customs on Wednesday, China’s iron ore imports in September were 52.6 million tons, an increase of 18% or 8 million tons from the 44.6 million tons in August. The data itself is not surprising, but if combined with the blackout of production from a round of steel mills that began in the major domestic steel provinces in late August, the reason for the unexpected increase in iron ore imports is worth considering.

According to Sheng Zhicheng, Director of Information of the Shinkansen Shinkansen, the sharp increase in domestic steel prices in September was the main incentive for the growth of iron ore imports. As domestic energy-saving emission reductions have a certain impact on the supply of the steel industry, stimulating steel production and distribution companies to raise expectations for prices, domestic steel product ex-factory prices and steel spot transaction prices have risen in turn in September. Some steel mills and traders should have moved their minds after seeing the situation and started importing large quantities.

“According to the September trajectory of the Nisshin Steel Index in September, the steel price rose by RMB 320/t in September. The price of construction steel in major markets in the country rose by RMB 300-500/t. In addition, the exchange rate is favorable in stages, and the appreciation of the currency will meet. Stimulated more imports.” Sheng Zhicheng pointed out.

According to statistics from the Securities Times, since the exchange reform began in June, the cumulative appreciation of *** against the U.S. dollar has increased by 2.48%. During the same period, the Australian dollar has appreciated by 11.71% against the U.S. dollar. In the early period, the imported foreign exchange earnings of iron ore have 8-9 percentage points. .

Hai Tong ** analyst Tian Gangfeng believes that although the domestic steel mills will limit the consumption of iron ore after the consumer demand will be weakened, but because last year's high-priced imports of iron ore has been digested almost, the company itself has the need for raw material supplement library. Combined with a 10%-13% reduction in the price of iron ore in the fourth quarter, steel mills will use the lower price opportunity to stock up more than a part of their inventory.

Mr. Zhong, who is responsible for giant horse metal, said that the increase in inflation expectations, the market price of steel prices tend to rise and fall, is also an important reason for steel companies and traders dare to import iron ore on a large scale. As the steel mills resumed production after the National Day, the downstream demand did not keep pace with the moment, and the steel prices were affected by the short-term supply and demand relationship, showing a pattern of weaknesses. However, in the mid- to long-term perspective, the probability of a final increase in the price of steel in the inflation environment is very high.

“In 2008, the copper price was 60,000 yuan/ton, and the rebar price was 5,400 yuan. Now the copper price has risen to 64,000 yuan, but the rebar has actually dropped by more than 1,000 yuan. At the same time, the depreciation of the US dollar, inflation expectations are constantly increasing, and the Australian iron ore The Peruvian copper mine must make money and the ore price must go upwards. Therefore, it is only when the steel supplements are replenished and what conditions contribute to the problem,” said Zhong.

Due to the combined effects of a large number of Chinese imports and the appreciation of the Australian dollar, the import price of iron ore accelerated after rising in August. According to statistics from the Nisshin Shinkansen, the average domestic iron ore import price in September was US$143/ton, which was US$3.35 or 2.4% higher than the average price in August.

"According to the actual September statistics, the arrival of Hong Kong iron ore was 2 or 3 months ago. The prices recently discussed are already high, so the domestic steel prices will definitely not be low next year," said a person in the steel industry.

At present, with the increasing pressure on energy-saving and emission reduction tasks, the scope of domestic steel mills to limit production is also expanding. Following the shutdown of power cuts and partial blast furnace shutdowns in August and September in Jiangsu, Zhejiang, Hebei and Shanxi Provinces, Henan and Shandong Provinces reported production cuts in the two provinces after the holidays, in which Henan required steel mills to reduce production by 50% in the coming March. Angang has shut down two blast furnaces.