2022 is the year when various plans will be implemented. China's economy will gradually return to the normal growth track under the "triple pressure" and steady growth regulation. As a major carbon emitter in the manufacturing industry, under the constraints of policies such as capacity and output reduction, dual control of energy consumption and low-carbon development, the steel output may decline slightly, and the steel export volume may change from increase to decrease.
Recently, the price of iron ore has continued to rise, and the phenomenon of "not light in off-season" once appeared in the market. According to the observation of the reporter of Securities Daily, since November 19, 2021, the iron ore disk has hit a phased low and started a rebound trend. As of January 13, 2022, the iron ore 2205 contract closed at 726 yuan / ton (RMB), with a cumulative increase of 41.25%.
"Domestic iron ore enterprises still have a certain profit margin at the price of about $120 / ton. If it is reduced to about $90 / ton, some iron ore enterprises will suffer losses, which is not conducive to the development and utilization of domestic iron ore resources," the relevant personnel of Hegang resources told the Securities Daily
Replenishment of raw materials in steel enterprises
Boost iron ore prices
Generally speaking, as the iron and steel industry enters the traditional off-season, the price of iron ore usually falls as a raw material. Therefore, the recent phenomenon of "not light in off-season" of iron ore has aroused discussion in the industry.
A person from a large iron and steel enterprise in Shandong told the Securities Daily: "recently, an important factor in the rapid rise of iron ore prices is the recovery of iron ore demand. The recent resumption of production by steel enterprises and the replenishment of raw materials before the Spring Festival have promoted the rapid rebound of iron ore prices."
In the view of insiders, iron ore prices are greatly affected by steel prices.
"The rise and fall of iron ore prices mainly depends on the relationship between market supply and demand. At the same time, there is a game between the profit space of iron ore and the profit space of steel mills. Steel prices rise, and the prices of raw materials upstream such as coke and iron ore also rise," He Gang resources told reporters
The rise of iron ore price is not only affected by market demand, but also affected by the rise of shipping costs.
"The increase in shipping costs can be regarded as a factor in the rise in iron ore prices. Shipping costs rose sharply in the third and fourth quarters of last year." The above River steel resources related personnel said.
In the view of insiders, the impact of steel plant replenishment demand on iron ore price is short-term. In the long run, iron ore price may be corrected.
"In 2021, the Platts index of iron ore rose as high as nearly $240 / ton, and then fell all the way below $90 / ton. At present, iron ore maintains a relative balance. Steel mills should be acceptable to the current iron ore price." "The off-season is not light, which is actually the result of the market game. The ideal state is to maintain it at about $90 / ton to $100 / ton. However, the ore price itself is supported by the relationship between supply and demand. If this price can continue, it shows that the judgment of steel enterprises on the end demand, including infrastructure and real estate industry, is relatively optimistic."
Steel industry faces production restriction
Iron ore price or shock callback
The state's regulation of crude steel output will also have an impact on iron ore prices. Under the background of carbon peak and carbon neutralization, the Ministry of industry and information technology has continuously put forward requirements to reduce the output of crude steel. The steel output is expected to decrease by 35 million tons year-on-year in 2021. Recently, Zhang Longqiang, Secretary of the Party committee and President of the Metallurgical Industry Information Standards Research Institute, said that from the practice in 2021, the reduction of crude steel production is conducive to restraining the excessive rise of imported iron ore prices, promoting the continuous improvement of industry profits and the improvement of industrial concentration. It is necessary for the iron and steel industry to continue to regulate the output of crude steel in 2022.
In this regard, Lange Iron and Steel Research Center predicts that the domestic iron and steel market may show a wide shock in 2022, the shock range will gradually narrow, and the average price of steel will move down.
A person from a large iron and steel enterprise in Shandong told the Securities Daily: "in the first quarter of 2021, the operating rate of iron and steel enterprises is very high and the production capacity is very large, but it is expected that the production capacity of the industry will decline significantly in the second half of the year."
With the advent of the limited production season in the north, how will the future market of iron ore perform?
Wang Guoqing, director of Lange Iron and Steel Research Center, said: "with the slight shortage of iron ore demand in the later stage and the continuous pressure on port inventory, iron ore prices may face shock correction."
Haitong futures said that it is reported that steel mills in North China and other places will start to limit production in late January, and the replenishment of steel mills will come to an end. After the festival, steel mills will mainly consume their own inventory, and spot transactions are depressed. Under the influence of multiple factors, there is insufficient space for iron ore prices to continue to rise.
Everbright futures believes that from the demand side, some steel mills continue to resume production. Near the Spring Festival, under the influence of the off-season consumption, there is great pressure on the continuous growth of steel demand, and the iron ore port inventory is at a high level. It is expected that the iron ore price will fluctuate in the near future.
The above-mentioned person from a large iron and steel enterprise in Shandong said: "iron ore price is the global market price. In addition to the demand of domestic iron and steel enterprises, we should also take into account the demand growth of the United States, Southeast Asia and other countries and regions, especially the growth of iron ore demand in the Indian market. India will be the main incremental market in the world in 2021."
Vale is the world's largest producer and exporter of iron ore. The rainstorm weather in Brazil has affected the transportation and operation of some mining areas in the southeast and south of vale, CSN and other mines. With the rise of iron ore prices, will the company increase its shipments to the Chinese market in 2022?
In this regard, Vale told the Securities Daily: "the sales volume, shipment volume and distribution of iron ore depend on factors such as sales strategy, quality and availability of product portfolio, market demand, iron ore price and premium."
"In 2020, 67% of Vale's iron ore and pellet products will be sold to China. Vale's guiding output of iron ore in 2021 is 315 million tons to 320 million tons, and it is expected that Vale's output of iron ore will reach 320 million tons to 335 million tons in 2022," the vale source said
