The hottest resumption of production increased dem

2022-08-11
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The demand for resumption of production and improvement of iron ore surged

the second quarter is the peak season for steel demand. With the rise of temperature, the construction of construction projects has entered the best season of the year, and the construction of construction projects in northern China will continue to resume, which will drive the demand for construction steel. Although the operating rate of steel mills has rebounded, the supply pressure has not increased significantly, and the steel price still has strong upward action. With the further improvement of the profitability of steel enterprises, the demand for iron ore procurement is expected to increase

industrial chain analysis

(I) spot market

in the first quarter of 2016, the international spot price of iron ore gradually rose, especially after the Spring Festival. The Platts index rose from $44 per ton to a quarterly high of $64.2 on March 7, with an increase of 45%. On the whole, iron ore prices have been rising due to the continuous replenishment of steel mills after the Spring Festival and the impact of supply side reform on the steel industry; On the other hand, domestic mines, driven by imported mines, also maintained a rebound trend after the festival. The purchase price of steel mills gradually rose, the mine shipped smoothly, and the inventory continued to decline. With the transfer of social inventory to site inventory, steel prices continue to rebound, and the improved profitability of steel mills has great support for ore demand. Therefore, the price of iron ore in the second quarter may be driven up by the replenishment of steel mills

(II) import and export

according to customs statistics, China's import of iron ore and its concentrate in 2016 was 158.8 million tons, an increase of 6.4% over the same period last year. Since the peak season of traditional industries is coming in March, the government work report emphasizes stable growth. GDP growth in 2016 was 6.5%-7%, and the expectation of stable growth is strong. Downstream demand is recovering one after another. After the superposition of years, the trend of steel prices is stronger, the sentiment of steel mills to resume production is high, the operating rate of blast furnace is expected to increase, and the demand for iron ore will rise. It is expected that the output and import of iron ore in the future will continue to be strong

(III) port inventory

in the first quarter, domestic iron ore port inventory fluctuated around 100 million tons. According to Mysteel statistics, as of March 25, the full caliber of iron ore inventory in 41 major ports in China was 96.307 million tons, a decrease of 2.76 million tons or 2.7% compared with 99.06 million tons at the beginning of January. As the current iron ore port inventory is relatively stable, it has a certain support for the rise of iron ore prices. Although the Platts index rose sharply and returned to above $55/ton, the short-term supply of iron ore did not increase significantly. However, it is worth noting that at present, steel mills have some resistance to the excessively rising iron ore price. Based on the sufficient supply of port inventory, steel mills are cautious about ore procurement, mainly consuming in plant inventory

(IV) operating rate

the operating rate of domestic mines hit a low and rebounded in the first quarter, but it is still at a historical low overall. Since the iron ore production capacity withdrawn in the past two years cannot be fully replenished during the technical exchange meeting held by the short term special committee, it is possible to attract high-cost mining enterprises to provide supply only after the price rises to a certain high level. At present, the operating rate of large-scale mines is only 50%, that of medium-sized mines is below 15%, and that of small mines is below 5%. The overall operating rate is very low. Moreover, the resumption of production is mainly based on the self owned mines of steel mills, and the resumption of production of private mines is not much. Most mines say that the resumption of production will be in the second quarter. In addition, with the sharp rise in the price of foreign mines, the price ratio of domestic and foreign mines has returned to the average, the price advantage of imported mines has weakened, the large-scale substitution of imported mines for domestic mines will be weakened, and the demand for domestic mines will rise accordingly

(V) shipping market

in the first quarter, the BDI index showed a downward and upward trend. Due to the impact of domestic holidays in January, the global shipping trade activity slowed down, and the BDI index fell from 473 in early January to 295 in mid February, a decrease of more than 35%. With the recovery of downstream replenishment demand and the shift of some transport capacity to foreign trade routes, the contradiction between supply and demand in the coastal bulk cargo transport market eased slightly, and the freight rate composite index hit the bottom and rebounded. As of March 29, the BDI index rose to 409, up 38% from the low in February. On the whole, the current international route market bottomed out and rebounded, and a large number of concurrently operated ships that had originally piled up in the domestic market poured into foreign trade routes. The pressure of excess supply of market capacity was compiled to promote the transfer and exit action plan of Beijing Tianjin Hebei chemical production enterprises to ease. Both the demand and supply sides ushered in favorable conditions at the same time, the supply and demand situation continued to improve, and the coastal coal freight rate entered the upward channel

(VI) downstream market analysis

in the first quarter, the spot price of rebar rose sharply. Because the focus of macro policies was on the de capacity of steel and the de inventory of real estate, which was good for both ends of steel supply and demand, and the market was expected to further improve supply and demand after entering the traditional peak consumption season. In addition, the production restriction policy before the opening of Tangshan Expo supported the market bulls, so the price gradually rose

in the second quarter, the low inventory of construction steel will provide fundamental support for the rise of steel prices if there is no need to adjust. On the whole, since last year, steel mills have been forced to reduce production, resulting in relatively low market supply. The inventory level of the circulation market, especially the billet inventory in Tangshan, was less than half of that in the same period last year. However, if the profitability of the steel plant remains high in the second quarter, the operating rate of the steel plant will be greatly increased. Therefore, we should pay attention to the changes of social inventory, blast furnace operation, macro policy, actual production restriction of Tangshan Steel Plant and other related factors

summary

entering the second quarter, it will be the peak season for steel demand. With the rise of temperature, the construction of construction projects has entered the best season of the year, and the construction of construction projects in northern China will continue to resume. In addition, all localities have actively implemented the work objectives proposed by the two sessions, accelerated infrastructure construction, and recently a number of "railways, highways, and infrastructure" (referring to railways, highways, and infrastructure) have been intensively started, driving the demand for construction steel. Although the operating rate of steel mills has rebounded, the supply pressure has not increased significantly, and the steel price still has strong upward action. With the further improvement of the profitability of steel enterprises, the demand for iron ore procurement is expected to increase. In the later stage, we need to pay close attention to the start-up of the steel plant and the change of terminal demand. After the short-term adjustment of iron ore, we can consider multiple orders in the middle line of the layout

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