Can the subtle changes in supply and demand of the

Can subtle changes in iron ore supply and demand affect the market pattern?

can subtle changes in iron ore supply and demand affect the market pattern

China Construction machinery information

Guide: data released by the General Administration of Customs on January 10 showed that China's imported iron ore in 2010 decreased by 8.99 million tons over the previous year, a year-on-year decrease of 1.4%. This is the first decline in China's total iron ore imports in the past 10 years. It should be said that this result is not unexpected: in the first November of last year, China imported 560 million tons of iron ore

according to the data released by the General Administration of Customs on January 10, China's imported iron ore in 2010 decreased by 8.99 million tons over the previous year, a year-on-year decrease of 1.4%. This is the first decline in China's total iron ore imports in the past 10 years. It should be said that this result is not unexpected: in the first November of last year, China imported 560 million tons of iron ore, a slight decrease of 0.9% year-on-year. Many institutions and experts predict that the import volume of iron ore will decline this year. Then, what impact will the "change" of iron ore supply and demand have on the market, and can it increase bargaining chips for the adjustment of pricing mechanism? In the era of high cost, how should the steel industry seek to solve the problem in the dilemma

the total amount decreased slightly, and the supply and demand pattern changed quietly

China's iron ore imports have been "increasing year by year" in the past 10 years. This data shows that China has reduced its iron ore imports for the first time. Does it mean that the market supply and demand pattern is changing? Ma Zhongpu, chief analyst of China United business, told this newspaper: "the relationship between the iron ore market is quietly changing, and the supply-demand balance between China and the international iron ore market has entered a stalemate." He further analyzed that since the outbreak of the financial crisis, the steel production of developed countries has not recovered to the pre crisis level, and the international iron ore supply and demand relationship is not tense; In 2009, China imported 628 million tons of iron ore. in addition to the demand factor, the low international market price is also an important reason, which is the high point of import volume; Since this year, the demand for steel and iron ore has entered an era of low growth, which will promote changes in China's iron ore import situation

in addition, some insiders believe that "the growth rate of ore supply will exceed the growth rate of demand" and "the uncertainty of China's demand for iron ore is increasing". The fourth quarter commodity report released by the Australian Bureau of agricultural resources and Economics said recently: due to the growth of China's domestic iron ore supply, China's iron ore imports fell year-on-year in 2010. Even if iron ore imports will rebound in 2011, the import volume of 628 million tons in 2009 is also a high point

the increasing self-sufficiency ratio of China's iron ore has eased the dependence on imported iron ore to a certain extent. Relevant data show that in the first three quarters of 2010, the output of domestic mines reached 780 million tons, with a year-on-year increase of more than 25%, and the proportion of domestic mines in the production of steel enterprises increased. Hebei Iron and Steel Group has made it clear that the dependence on foreign mines will be reduced from the current 50% to less than 30% in the next five years. At the same time, the "changes" in China's demand for iron ore reflect the changes that China's steel market is undergoing. Ma Zhongpu said that the overall operation situation of China's economy will not change significantly this year, but the adjustment of economic structure and the transformation of development mode will lead to the annual low growth and high automation trend of China's total crude steel consumption in the future, which is bound to have an impact on the demand for iron ore. Therefore, we have every reason to believe that the supply-demand relationship of international iron ore will not be tense in the next two years, and the growth of domestic steel demand of more than 20 million tons in 2011 and the rapid increase of domestic iron ore production will not bring about a substantial increase in iron ore imports

"my steel" analyst Zeng Jiesheng said that in the future, China's structural adjustment, energy conservation and emission reduction will continue to curb the growth of demand for iron ore. in addition, the sharp rise in ore prices has also promoted the growth of domestic ore production, replacing imports. This year, domestic ore production is expected to increase by 23%

is it difficult for steel enterprises to get rid of the dilemma of low profits

it is worth noting that while the total import volume decreased, the import price increased significantly: the amount of imported iron ore in 2010 was US $79.427 billion, an increase of US $29.280 billion from US $50.147 billion in 2009. It is equivalent to that iron and steel enterprises spent about 195.3 billion yuan more on procurement costs, while the profit margin of iron and steel enterprises from January to October was only 2.8%, significantly lower than the national average profit margin of industries above Designated Size in the same period

in fact, 2010 is not easy for Chinese steel enterprises. At the beginning of the year, international mining enterprises pushed quarterly pricing to replace the annual pricing system that has lasted for more than 40 years. Since then, the price of iron ore rose from less than $90/ton in January to $146/ton in December, with an annual increase of more than 60%. The following set of data can show the dilemma of small profits of China's steel enterprises after the implementation of quarterly pricing: in the first three quarters of 2010, the average CIF price of imported iron ore in China was $122 per ton, up 56% year-on-year. For this reason, the cost of China's steel enterprises increased by 130.3 billion yuan, while the profit of the whole industry in the same period was only 64 billion yuan. Especially in the third quarter, the net profit of vale in Brazil reached a record US $6billion in Japan, which has water with China, while Angang Steel in China lost 178million yuan in the same period

mazhongpu believes that the fundamental reason for the high output, thin profits and even losses of iron and steel is the lack of its own advantages in the iron ore industry chain and its ability to regulate the supply-demand relationship of the iron ore market. The high price of iron ore and the strategic weakness of iron and steel enterprises in the international iron ore market will force iron and steel enterprises to run low profits into a dangerous situation that is difficult to change in the short term. Now, the China Iron and Steel Industry Association has once again sat at the negotiating table. Whether it can change the extremely uneven distribution of interests between the upstream and downstream of the industrial chain is still in the game

how to solve the dilemma in the industry

it should be said that the "slight change" of the iron ore pattern has given new expectations to China's steel enterprises who are seeking adjustment of the pricing mechanism. However, the industry generally believes that in the past two years, whether it is the change of supply and demand pattern or the adjustment of the pricing mechanism, steel enterprises will inevitably face the double squeeze of high costs and slowing demand growth. Industry analysts predict that the "tightest" period in the global ore market has passed, but Chinese steel companies are still struggling to get rid of the nightmare of high priced iron ore in the short term. In this context, the iron and steel industry to seek their own reform is undoubtedly the key to get out of the dilemma

"at present, the changes in market relations and the low profit environment have obvious phased characteristics, which not only brings difficulties to enterprises, but also brings development opportunities to enterprises in a specific environment." Mazhongpu said that first of all, it determines that there is no way out for steel enterprises to rely on large-scale domestic investment and expansion for development as a whole. Iron and steel enterprises will enter a new period of development strategy adjustment for solid materials with a certain mechanical strength, focusing on enterprise restructuring and going global development. Secondly, the relative stability of the total supply-demand relationship determines the increase in the stability of the market relationship. However, steel enterprises cannot rely on the long-term rise and fall of market prices for the profit development mode of enterprises, but should take the innovation of development mode as the driving force to control the evolution of the future market

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