Imported iron ore prices plummeted

In the second quarter, the market will face high inventory levels, and there will be limited space for rising demand in the rest of the year. The price of iron ore, which had been solid up two years ago, is now experiencing a cliff-type decline.

The latest report from Goldman Sachs stated that due to the record high iron ore inventories in China and the structural oversupply of iron ore imported from China, iron ore prices are expected to drop sharply in the future and will fall below US$100 per ton in 2015. The price is 80 US dollars per ton.

In fact, without waiting until 2015, imported iron ore has continued to decline since the beginning of this year.

The monitoring data provided by the relevant agencies shows that since the beginning of this year, iron ore port stocks have shown signs of upward trend. As of May 9, the total iron ore inventories of major ports nationwide was 111 million tons, which was based on the May 2 data basis. It added another 600,000 tons, an increase of 0.54% over the previous period. A year ago, this inventory was only 75.2 million tons.

Guotai Junan Iron and Steel Researcher Liu Qiuping said that this year's iron ore port inventory has not been a clear "down library" action, and always maintained at a high of about 100 million tons, "There are certainly some factors in this mine, market recognition Is likely to account for 30% of the total."

However, port inventory hit record highs and iron ore prices have drawn another completely different curve.

According to data held by the reporter of the "First Financial Daily", the price of imported ore has fallen since the beginning of this year, and the price of ton has fallen from the previous level of more than 120 US dollars to the current level of about 103 US dollars. "This price level is already a new low since mid-September 2012," said the analyst.

Goldman Sachs pointed out in the report that in the first quarter of each year there will often be a decline in the supply of iron ore affected by the weather and rising demand in the Chinese steel sector, but this year's iron ore prices have fallen by 21%. “In the second quarter, the market will face inventories. There will be limited room for rising demand during the rest of the year."

According to an interview by many reporters from this newspaper, at present, whether it is steel mills, steel traders or even downstream users, their iron ore purchases are mainly based on the use of mining and are very cautious.

An insider of a large steel plant in North China introduced that its stock is about 600,000 tons, and the floating stock is about 800,000 tons. It can maintain about 10 days, and the minimum can be compressed to 78 days. "This year's policy is mainly based on mining, and steel mills generally do not take the initiative to increase the stock of raw materials."

A steel plant in Shanxi also revealed that iron ore is mainly based on the spot of the procurement port, which is currently in stock for about a week, when it is compressed to 3 days when it is low, and it is about 10 days when it is high.

This practice of steel mills is also confirmed by traders.

According to a trader in East China, this year's iron ore sales were generally not as good as last year. “For example, a single 10,000 to 20,000 tons was normal, but now it is only a few thousand tons. From the port situation, the source of the northern port Adequate competition and shipments are difficult."

The trader operates its own mines and has advantages in both cost and source supply. Last year, the average tons of mines still had a few US dollars in profits. This year, however, it was not so fortunate. Because the mainstream mine fell too much, the prices of non-mainstream minerals have also come down a lot, and "there is no profit."

Another company where the trader is located is more affected: At present, except for a few non-mainstream minerals that are priced by the index, most varieties are losing money. At most, one ton loses 17 eighteen dollars. The source disclosed that regardless of the price of iron ore, the steel mills are always purchasing, but “now it seems to form a buyer’s market, steel mills are picking and picking, and each purchase is a small batch”.

Liu Qiuping analyzed that when the shipment volume of major miners increases, the prudent procurement of domestic steel mills, coupled with the expectation that miners will increase their shipments in the second and third quarters, delays procurement or encounters high-value mines. Most of them do not buy, these have led to a relatively small push for ore prices.

In fact, the sharp decline in the price of iron ore is not unrelated to the mine.

The specific mode of iron ore trade ** is that a steel factory or trader passes a letter of credit issued by an overseas bank (usually 3 to 6 months), and after paying a deposit of 15% to 30%, the bank pays it to the mining company. The price of the ore is shipped to the steel mill or trader, and the payment can be repaid after 3 to 6 months. In the meantime, if the ore that has arrived is realized, it is equivalent to obtaining a short-term ** for a certain period.

However, taking into account the potential risk of ** mines, just last month, the China Banking Regulatory Commission issued a document specifically to determine the risk of iron ore trade, and asked the 15 regional banking regulatory bureaus to report the "risk monitoring statistics of imported iron ore trade **". And analysis report.

Analysts said that since May, some domestic banks have asked traders to increase their L/C bond deposits to 30% to 50%. “Part of the pre-existing ** mine letter of credit will expire in May and will be repatriated, and there will be selling pressure on resources.” .

According to media reports, the deposit ratio of iron ore trade letters of credit has increased significantly. Many banks have suspended the issuance of letters of credit for iron ore traders. Many traders have stopped importing iron ore. In order to repatriate funds as soon as possible, many traders began to The market sells iron ore.