Since late November 2021, the iron ore market has continued to fluctuate upwards, with an increase of more than 40% in the range. According to the monitoring data of Lange Steel Cloud Business Platform, as of January 13, 2022, the Platts iron ore price index was US$128/ton, an increase of US$40.8/ton or 46.8% from the low point in November last year; Rizhao Port The price of 61.5% fine ore was 845 yuan/ton, up 270 yuan/ton from the previous low, or 47.0%.
Wang Guoqing, director of the Lange Steel Research Center, said in an interview with a reporter from Securities Daily that since late November 2021, iron ore prices have continued to rise, mainly due to three reasons: first, the resumption of production in steel plants and the demand for iron ore The second is that the steel mills stock up on New Year's Day and the Spring Festival, and the demand for iron ore further increases; the third is that the weather in Brazil and other places has a certain impact on the supply side.
"After more than a month of continuous rise, iron ore prices have also begun to come under pressure." A private equity industry analyst in Shandong told the "Securities Daily" reporter that with the weakening of steel companies' demand for restocking and the prominence of production restrictions by some steel companies, Iron ore prices are under pressure or face a shock correction.
Iron ore prices have risen by more than 40% in more than a month
In the context of carbon neutrality and carbon peaking, the Ministry of Industry and Information Technology proposed a requirement to reduce crude steel production. According to recent data from the China Iron and Steel Association, the annual steel output in 2021 is expected to be 1.03 billion tons, about 35 million tons less than in 2020.
According to data from the National Bureau of Statistics, the national crude steel output from January to June 2021 was 563.33 million tons, a year-on-year increase of 11.8%. This means that in the second half of 2021, the national crude steel output will drop significantly.
A person from a large iron and steel enterprise in Shandong told the "Securities Daily" reporter that in the second half of 2021, as the iron and steel industry reduced crude steel production capacity requirements, iron and steel enterprises generally reduced production capacity, and the industry operating rate and steel production fell significantly. "Recently, with the completion of the production reduction work, the steel mills have shown the momentum of resumption of production, superimposed on the replenishment of raw materials before the Spring Festival, and the price of iron ore has rebounded rapidly."
According to the monitoring data of Lange Steel Cloud Business Platform, as of January 7, 2022, the blast furnace operating rate of major steel enterprises in the country was 72.3%, an increase of 1.8 percentage points from the beginning of December 2021.
The production data of key iron and steel enterprises counted by the China Iron and Steel Association can also see an increase in output. In late December 2021, the daily output of pig iron in key iron and steel enterprises was 1.886 million tons, an increase of 254,000 tons compared with late November; the daily output of crude steel was 2.092 million tons, an increase of 375,000 tons compared with late November.
Some steel mills limit production
Iron ore price or shock callback
"Although iron ore prices have risen significantly recently, driven by factors such as the resumption of production and stocking of steel mills, this rise is also under pressure." The aforementioned private equity sources believe that the first quarter is a low season for steel demand, which is affected by the weak construction industry. As a result, the demand in related industries such as excavators and heavy trucks has remained sluggish for many consecutive months, and the container market has also fallen from a high level. The demand in the steel industry is still difficult to improve in the first quarter.
On the other hand, the restocking of steel mills is coming to an end, and at the same time, the superposition of production restrictions will suppress the price of iron ore. "We expect steel production to pick up in January 2022, and it is expected to weaken in February-March." The aforementioned person said that according to the staggered production during the heating season and the production restriction documents for the Winter Paralympic Games, in the first quarter of 2022, Hebei, Tianjin, Production in Shanxi, Shandong and Henan regions decreased by 30% year-on-year. In terms of rhythm, the impact in January is relatively small. During the Winter Olympics from February to March, the control and production restrictions are expected to be tightened. Steel mills may tend to complete the production reduction task in February and March, which will lead to the northern part in February and March. Demand for iron ore from limited steel mills will be reduced.
"After calculation, from the beginning of January to March 15, 2022, the crude steel output of the provinces and cities around Beijing-Tianjin-Hebei will decrease by 27.95 million tons, with an average monthly decrease of 11.18 million tons; it will also affect the import demand of iron ore by about 29 million tons. The average monthly decrease is 11.6 million tons." Wang Guoqing said.
In addition, the current domestic iron ore port inventory is still at a high level, which will suppress the rise in iron ore prices; the superimposed iron ore shipments and arrivals to ports are still relatively high, and the iron ore supply and demand relationship in the first quarter is still relatively loose In the later period, China's imported iron ore prices continued to have insufficient upward momentum and faced certain pressure of correction.
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