Iron ore prices are hard to sustain

Affected by the European debt crisis and the weakness of the domestic steel market, iron ore, which had been “easy to rise and fall”, continued to fall from mid-September to October. Although iron ore prices have recently shown signs of recovery, some market participants believe it is too early to judge the “reversal” of iron ore prices.

Iron ore prices are picking up As the downstream industries such as domestic real estate, machinery and electronics, and autos continue to slump, the financial pressure on iron and steel companies has been aggravated, which has once put pressure on iron ore prices. However, after the iron ore price experienced a 30% plunge in October, the Platts Index has now risen for two weeks in a row. On November 15, both Australia and India mines were tendered and the transaction price was far higher than market expectations.

With the recent slight increase in the spot price of mines outside the port, the domestic market has also been blowing hot air, and the ore prices have gradually moved up the track. Since last weekend, affected by the continuous warming of the steel billet and imported ore market, the depressed atmosphere of domestic mines has gradually improved, and the outlook for beneficiary companies is particularly evident. According to some spot traders, in addition to the relative calm in the Liaoning mining area, prices in Shanxi, Shandong, and central and southern Hebei have all increased slightly, and the number of cross-region inquiries by merchants has also increased. In the context of the continuous warming of domestically produced ore, market prices continued to rise in most regions. In response, Gao Baozhang, an analyst at Fubao Information, told the reporter that the strong rebound in iron ore is mainly related to the improvement of the current domestic macroeconomic outlook, lower crude steel output, and the continued decline in rebar inventories.

Last month, domestic imports of iron ore to Hong Kong decreased significantly. Data show that in October China imported 49.94 million tons of ore, an increase of 9.23%; the average unit price of imports was 175.54 US dollars / ton, down 0.22%. Foreign mines have pulled up foreign mines by reducing shipments and tenders. The recovery of foreign mines has led to an increase in the price of domestic mines. In addition, most of the steel mills' winter storage is not smoothly implemented and the inventory is small. During the early fall of iron ore, the steel mills are more cautious about the purchase of iron ore, and the iron ore stocks are relatively small. Although the steel mills stopped production and overhaul, they still faced pressure from the database.

It is too early to assert that the “inflection point” is appearing. “The large-scale production stoppages and overhauls of steel mills at this stage, including the suppression of internal steel mines by steel mills, have led to the suspension of production of many small-scale selected plants and mines in the country. There are not many resources available for circulation in the market. Gao Hongzhang said that if the production capacity of the steel mills is fully opened in the first quarter of next year, there may be a retaliatory rebound in the domestic ore market.

However, as for the recent warming of the iron ore market, some analysts believe that the short-term relief of the European debt crisis and the general increase in commodity prices to boost, from the current situation of China's overall real economy, iron ore recent rally is a repair rebound . In the short-term, the possibility of iron ore prices fully recovering the early-stage decline is not very great. It is too early to assert that the “inflection point” is occurring, and it is still necessary to make effective judgments based on long-term trends.

Some market participants also believe that although the market has recently rebounded, but because of lack of substantial positive support, the rebound time will not be too long, the space is relatively limited, the future ore prices will gradually decline and return to rationality. In the future, the demand for iron ore will be weakened in the steel industry. The voluntary price cut of Vale, the world’s largest supplier of iron ore, will also reflect its judgment on the future supply and demand relationship in the iron ore market.