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Be cautious about the rise of iron ore

来源: 期货日报 January 9, 2020 09:18 Source: Futures Daily

With the approach of the Spring Festival, the replenishment of steel mills has come to an end, the willingness of steel mills to replenish stocks has decreased or it has restricted the demand for iron ore, and iron ore lacks further upward momentum. The recent hurricanes and fires in Australia have not actually had any substantial impact on iron ore supply so far.

Last Friday, the main iron ore 2005 contract broke through the previous high, hitting a new high of 670.5 yuan / ton, and this week maintained a high and oscillating trend. The shipment volume of foreign mines in the fourth quarter of last year was lower than the market expectation, and the market generally expected that the shipment volume of foreign mines in the first quarter was relatively low, which supported the price of ore. With the approach of the Spring Festival, steel plant inventory continues to rise, which is higher than the same period last year. The replenishment of steel mills has come to an end. The willingness of steel mills to replenish stocks has decreased or has restricted the demand for iron ore. Iron ore lacks further upward momentum. In addition, the recent market speculation in the Australian hurricane and fire, but so far has not actually had a substantial impact on iron ore supply. In summary, we believe that after the price of minerals continues to rise, there is no incentive to further increase it, and we should be cautious about the upward space.

Steel plant inventory continues to rise, steel mill replenishment is coming to an end

From the perspective of steel plant inventory statistics from Mysteel, since mid-November last year, the stock of sintered sinters of steel mills has increased for the seventh consecutive week, from 15.0561 million tons on November 15 to 18.7081 million tons on January 3. The replenishment of the steel plant started earlier and the replenishment cycle is longer. The current absolute inventory level is already higher than the same period in 2019, which is only 1.24 million tons away from the 2019 Spring Festival high of 19.948 million tons.

From the perspective of spot transactions, as the replenishment of steel mills has been completed, the degree of caution in steel plant procurement has increased, and the intensity of port spot transactions has weakened. Steel mills are not very willing to purchase more than 90 US dollars / ton spot, fear of heights still exists.

As the conflict between supply and demand of iron ore tends to ease in the second half of 2019, steel plant replenishment and destocking have become the main driving sources of the iron ore market. The rebound of iron ore prices before the National Day and the current round of rebound have come from steel plant replenishment. Library push. As the replenishment of steel mills comes to an end before the Spring Festival, the price of iron ore further rises and the margin of motive power weakens.

Expectations for the delivery of foreign ore are low, which supports the price of ore

The shipping intensity of foreign mines in the fourth quarter of 2019 was significantly lower than market expectations, resulting in no significant increase in port inventory, and the supply side, especially the mainstream mine VALE, hovered at a low level. The market generally believes that the supply of foreign mines in the first quarter will be relatively low, mainly due to the following three reasons: first, from a seasonal point of view, the first quarter is generally the off-season of foreign mine shipments, and the shipment volume is at a low level throughout the year; second, In the fourth quarter of 2019, the strength of foreign mine shipments was lower than market expectations. The market has doubts about the recovery of mainstream mines, especially VALE, and believes that the recovery of supply in the first quarter may still be lower than market expectations. Finally, considering the 2019 VALE, Both the Rio Tinto and BHP accidents occurred in the first quarter, which directly led to a sharp decline in iron ore supply and a sharp rise in prices in the first half of 2019. Australian hurricanes were more intensive in the first quarter, and it may not be ruled out that hurricanes could once again affect the Australian mine shipment .

Profitable steel mills, steady demand for iron ore

With the rebound of steel prices in the fourth quarter of last year, the profit of long-flow steel mills still maintains a good level. According to our calculations, the current tonnage profits of rebar and hot coil of long-flow steel mills are 378 yuan and 466 yuan, respectively. In the case of better profits, except for administrative production restrictions and the need for steel plant maintenance and production reduction, steel mills have no incentive to reduce output. From this perspective, steel mill demand for iron ore will remain relatively stable.

With the approaching of the Spring Festival, the replenishment of steel mills has come to an end. The willingness of steel mills to replenish stocks has decreased or it has restricted the demand for iron ore, and there is a lack of further upward momentum. In addition, the recent market speculation has focused on Australian hurricanes and fires, but in fact has not had a substantial impact on iron ore supply so far. All in all, we believe that after the ore prices continue to rise, or lack of motivation to push further, we should be cautious about the upside.

(Author Unit: Guotai Junan Futures)

(Responsible editor: Xu Zili)


China Economic Network statement: Stock market information comes from cooperative media and institutions, is the author's personal opinion, is for investors' reference only, and does not constitute investment advice. Investors do so at their own risk.
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Be cautious about the rise of iron ore

来源:期货日报 2020-01-09 09 : 18Source : Futures Daily
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