In the first half of this year, the overall iron ore market showed an upward trend of shock. China's crude steel output remains high, port iron ore inventory is still at a low level, market fundamentals are still good, short-term iron ore prices are easy to rise but difficult to fall.
"With the gradual easing of supply side, the market will" cool down "and iron ore prices will be relatively strong in the second half of the year, even if they are not" crazy. " For the second half of the iron ore market trend, analysts forecast.
Inventories fell to a three-year low
After the outbreak of novel coronavirus pneumonia, the iron ore market is worrying about the overseas supply side. Although the demand for iron ore from many foreign steel mills is weakening, with the proper prevention and control of the epidemic situation in China, the manufacturing industry recovers rapidly, and the steel mills' demand for raw materials increases. With the expansion of China's domestic market demand, the proportion of some international iron ore shipped to China has increased. In March, the shipment speed of Australia's iron ore market accelerated, with an increase of more than 90% to China.
"Although the import volume of iron ore is increasing, the spot inventory of China's domestic ports shows a downward trend, indicating that the demand for iron ore is expanding." Analysts believe.
Due to the novel coronavirus pneumonia epidemic in Brazil, the market supply side is more obvious, leading to some varieties of resources are tight. With the tightening of the supply side, the recovery of steel production and the "heroic" rise of the finished product market, the steel mills' demand for iron ore increased significantly, and the iron ore market rebounded strongly in the second quarter.
In the off-season of demand, the "ferocious" rise of the imported iron ore market is due to the recent continuous surge of the financial market, which has boosted the commodity market, and the shock rebound of black futures has given a strong boost to the market. On the other hand, affected by the hurricane in Australia, the epidemic situation in Brazil and the tailings dam break, it is expected that the supply side of iron ore market will continue to be tight in the later period.
It is worth noting that from the perspective of port inventory, China's port iron ore inventory has been in a process of inventory reduction. Inventories fell by about 34 million tons in just three months from April. At present, China's port inventory has dropped to around 100 million tons, which is very fast. The iron ore port inventory has reached a new low in nearly three years.
The pace of price increase has not stopped
In the first half of the year, despite the sharp decline of overseas market demand, China almost took on the task of global iron ore demand consumption, which made the pace of iron ore price increase continuously.
Novel coronavirus pneumonia is a major problem in China's domestic and overseas markets, and the demand for iron ore is not strong. Novel coronavirus pneumonia has been gradually restored. With the high output of China's iron and steel industry, the spot price of port iron ore has been under the cover of the frenzied speculation of the futures market, and resolutely escaped the global spread of the new crown pneumonia epidemic. In April, the market began to go beyond all commodities, and the iron ore market began to launch a counter offensive trend. Analysts said.
Since the novel coronavirus pneumonia epidemic in May, the iron ore transportation in Brazil has been on the low side. Due to the closure of three comprehensive mining areas by vale, although vale claimed that the target output of iron ore in 2020 and the volume of goods transported to China would not be affected, the market was still very excited, worried that this emergency would have a significant impact on Vale's target output in 2020, and all parties in the market began to hype up. However, only after a short period of hot, iron ore prices will appear a small drop.
"Subsequently, the price of iron ore was in a high shock consolidation stage. Generally speaking, the rise time of this wave was from early May to early June, and the price of Pb powder in Tianjin Port rose by 18.41% in just one month." Analysts.
In the first half of the year, China's iron ore import index showed a rebound trend, with a cumulative increase of 18.07%, reaching an annual high in early July. As of July 10, the import iron ore index was at US $107.16/t, up 1.9% on a month on month basis and down 12.6% on a year-on-year basis, gradually strengthening the support for the iron ore market.
Demand will remain high in the second half of the year
With the gradual recovery of China's steel market demand, iron ore prices form a strong support. Judging from the trend of China's domestic iron ore market, the iron concentrate market started in May. Driven by the rising price of imported iron ore, the major miners have increased the ex factory price one after another. Taking the mines in Shandong Province as an example, since May, iron ore has been increased three times in a row, with a cumulative increase of 105 yuan / ton. Although the large mines plan to continue to increase, the steel mills did not agree.
"For the current high price of iron ore, steel mills are hesitant and still focus on purchasing in batches and less times. In the first ten days of July, the ex factory price of Shandong Luzhong and Jinling large mines was 1000 yuan / ton, reaching a new high in the year, with an increase of 21.21% over the beginning of the year. " Analysts said.
In the second half of the year, iron ore prices were relatively strong even if they were not "Crazy". From the perspective of time dimension, the global commodity market and even the overall economic situation in 2020 will show dramatic fluctuations, and the future situation of China's iron and steel industry with high raw material prices is not optimistic. From the point of view of the supply side, except for the monsoon, Australian iron ore is mainly automated and less affected by other factors.
It is worth noting that, except for Rio Tinto's slight reduction of its 2020 production target, BHP has not changed its production target. In non mainstream countries, India and South Africa's iron ore shipping volume, even though there is an increase, has limited space. At the same time, it does not rule out the tight shipping volume caused by the outbreak of the epidemic again. The uncertainty factors faced by the market mainly focus on the uncertainty of Vale's shipping situation in the later stage, and whether the annual target can be achieved under the influence of the epidemic situation is still facing a test.
According to the forecast of Jinxin Futures Research Institute, Brazil is still the focus of the supply side in the second half of the year, and the limited capacity of Vale after last year's mine disaster is still the core issue of the supply side.
"It is expected that in the second half of the year, Vale will reduce its production target again, which is more likely. Domestically, steel production will not shrink significantly in the second half of the year. In the second half of the year, China's demand for iron ore will remain at a high level, and import growth will slow down. It is estimated that the annual import of iron ore is 1.09 billion tons, and the port inventory of iron ore is expected to rise to 114.213 million tons at the end of the year, a decrease of 12.74 million tons compared with the beginning of the year.
