As we all know, iron ore is the most important raw material in the steel industry and is known as the "grain" of modern industry.
On December 7, the General Administration of Customs released data that in the first 11 months, the total value of imports and exports was 3796 trillion yuan, the same as the same period last year. Of these, export 216 trillion yuan, a year-on-year increase of 03%；Import 1636 trillion yuan, down 05%；* Surplus 524 trillion yuan, an increase of 2 percent year-on-year8%。Judging from the published data, the import volume of most categories has increased and the average import price is **. However, there are always exceptions to everything, and in the first 11 months, 10 iron ore was imported7.8 billion tons, an increase of 62%, the average import price is 7888 yuan ton, year-on-year **23%, which is almost the only *** commodity. In fact, since November, the average spot landed price of international iron ore has exceeded 120 US dollars, and the domestic spot ** has exceeded 1,000 yuan in one fell swoop.
Due to the extremely large import volume of iron ore and the pillar position of the steel industry in the national economy, coupled with the fact that China's high-grade iron ore is almost entirely dependent on imports, iron ore has always been the most sensitive nerve affecting investors and steel enterprises in the capital market. As one of the most important cost components in the daily production and operation of the majority of steel enterprises, the sharp fluctuation of iron ore has brought severe challenges to the smooth operation of iron and steel enterprises, and its excessive operation will further eat up the profits of the steel industry, making the operating conditions of most enterprises worrying. Not only that, due to the pivotal position of steel in the entire industrial system, it will also be transmitted to the huge downstream industrial chain such as real estate, infrastructure, automobiles, and home appliances, resulting in the production cost of most industrial products, and the cost of means of production and daily necessities of the whole society will increase.
In recent years, although the star varieties of the commodity market have emerged one after another, such as ** in the past few years, nickel, palm oil and this year's lithium carbonate and the European line, none of them can be as strong and lasting for many years as iron ore**.
Let's start with a few news. According to Wenhua Finance on December 22, overseas mines shipped intensively to the port, the efficiency of terminal operations is limited, the number of ships in the port this week increased by 19 to 148, a 22-month high, in the context of a slight decline in the volume of ports, the domestic 45 port import ore inventory increased by 2 week-on-week6%（301.570,000 tons) to 11,886760,000 tons, refreshing a three-and-a-half-month high, and the accumulation of iron ore resources in the port accelerated. According to the data of My Steel, the blast furnace operating rate of 247 steel mills surveyed by My Steel is 7771%, down 06%, an increase of 1 compared with last year78%；The capacity utilization rate of blast furnace ironmaking is 8475%, minus 008%, an increase of 2 year-on-year36%；The profitability of steel mills is 3377%, minus 173%, an increase of 12 year-on-year12%；The average daily output of molten iron is 226640,000 tons, down 0220,000 tons, an increase of 4 percent year-on-year690,000 tons. Coincidentally. According to Caixin, in the 2024 China and Global Steel Demand Conference held on December 22, the Metallurgical Industry Planning and Research Institute gave **: China's steel consumption is expected to be 8 in 2023900 million tons, down 33%；It will continue to decline by 1 in 20247% to 87.5 billion tons.
As of 15 p.m. on December 26, the main iron ore contract 2405 closed at 983At 5 o'clock, the front-month contract 2401 closed at 10465 points. Compared with the four major indexes such as the Shanghai Composite Index, the Shenzhen Component Index, the ChiNext Index and the Science and Technology Innovation 50 Index, which have recently hit new lows in the year, iron ore, as one of the core varieties of bulk commodities, has hit new highs one after another. In particular, the front-month contract 2401 hit a new high since June 2021, and the main contract 2405 also hit a new high since May 2022. 2401 and 2405 as the two main contracts, since May this year has been more than one month, during which not only across the summer of the traditional industry off-season and the golden nine silver ten peak season, now is most of the country in December cold winter moment, this round of sweeping the land of China greatly cooled rain and snow weather and did not slow down the pace of iron ore at all, but since last week all the way soaring, now the contract has already exceeded 1000 yuan tons, the main contract is also a stone's throw away from the 1,000 yuan mark. Of course, the spot market is not far behind, according to the data released by my steel network, as of December 26, the mainstream varieties of iron ore have exceeded the 1,000 yuan ton mark. Similarly, on December 26, the iron ore forward spot** index increased by 31 dollar or 224% to 141$25 tonnes, another new high since mid-June 2022.
Two weeks ago, Beijing and Shanghai, the two first-tier cities once again relaxed the property market control policy, although the property market favorable policies were less than expected again, so that the market was disappointed, but did not let the iron ore ** fall, but became one of the driving forces again. Not only that, in the past few years, known as the small stock index, the rebar **, the trend has basically followed the trend of A-shares, recently driven by the upstream related varieties of iron ore, but also unexpectedly out of the A-share completely different trend, and recently regained the **trend, its monthly ** has been 3 consecutive months**.
There is no doubt that the ** surge in iron ore has completely deviated from the fundamentals, and the hidden driving force and existence behind it are still unknown.
Recently, iron ore is abnormal, which has naturally attracted great attention from relevant state departments, and the regulatory authorities have also issued warnings many times, but the effect does not seem to be obvious. On November 15, the National Department of Science and Technology sent staff to the Dalian Commodity Exchange to jointly study and strengthen the supervision of the iron ore marketOn November 23, the National Department of Science and Technology, the Price Supervision and Competition Bureau of the State Administration for Market Supervision and Administration and the Department of the China Securities Regulatory Commission organized a meeting of some iron ore enterprises and companies to strengthen the linkage supervision of iron ore futures and spotsOn November 24, the state once again announced that it would organize a meeting of major port enterprises in conjunction with the Water Transport Bureau of the Ministry of Transport and the Price Supervision and Competition Bureau of the State Administration for Market Regulation to strengthen the supervision of iron ore in portsOn November 27, it was reported that the National Department of Science and Technology recently conducted research on the first indices of steel, iron ore, lithium, palm oil and other commodities compiled and released by a number of institutions, to understand the relevant index compilation plan, data collection, calculation and release system, etc., and to study and promote the healthy and orderly development of the first index market.
In fact, this is not the first time that national regulators have made an opinion on iron ore **too fast**. In previous years, the national Dalian Commodity Exchange and other regulatory agencies have also repeatedly carried out policy level guidance, but the market is often the first to fall and then rise, at the beginning to respond to the country's shouting and the regulatory measures of the big business, but in the later stage often to more aggressive retaliation to reflect market expectations. However, iron ore **several times in previous years**, most of which have a relatively large correlation with fundamentals, and the later expectations are more optimistic, so the market often accepts this result calmly in the end, but this time, it seems to be at odds with the fundamentals.
From a fundamental point of view, the main use of iron ore is almost the only downstream product - steel, including the most important product - rebar, its downstream real estate and infrastructure industry has continued to slump in the past two years, and from the trend of the future new housing start rate will continue to decline, similarly, in the process of resolving the local debt problem in a new round, all kinds of local infrastructure projects are bound to continue to cut, and the continuous decline in demand for rebar will be ironcladIn addition, subject to factors such as declining household income and high unemployment, since the beginning of this year, large consumption industries such as home appliances, automobiles, and electronics have also been relatively sluggish, so the consumption of hot coil manufacturing industry must also decline year-on-year. From the demand side, whether it is rebar or hot coil, the demand is showing a downward trend, and at the same time, with the global economic growth slowdown, the entire world steel demand is also declining. From the supply side analysis, Vale, BHP Billiton and Rio Tinto, the world's three major mines, the overall output this year has increased year-on-year, global shipments have also maintained a high level, domestic arrivals are the first year-on-year, and it is expected that the supply will still increase in the future.
In the face of poor market demand and the off-season of the industry, coupled with the fact that many places in the north have launched heavy pollution emergency response, most steel mills choose to take the initiative to stop production and reduce production and other measures to deal with it. At the same time, at the end of the year, the shipment volume of overseas mines, Australia, Brazil and other recent shipments hit a new high in the year. According to common sense, the decrease in the downstream demand side and the increase in the upstream supply side should make iron ore ** fall, after all, this has been the case most of the time in previous years, but this year is a special exception, so that the vast majority of industry insiders and investors can't understand.
The basic attributes of market discovery and corporate hedging tools are destined to be not intended by the regulator to become a completely speculative tool in the capital market. In 2021, the coal market exploded, bringing the spot market soaring, and the market coal sector thermal coal, coking coal, coke and other varieties are also blindfolded, and finally the regulator intervened strongly, and the trading volume of thermal coal has fallen to the freezing point in the past two years, distorted, and completely lost the significance of the market as a future prediction and hedging. Presumably, the regulators do not want to repeat the mistakes of the past and make iron ore the next thermal coal. Therefore, the recent "strange phenomenon" of iron ore may be attributed to the bloodthirsty nature of speculative capital, after all, it is used for speculation, and in the market, the basic logic of inference and thinking according to common sense is sometimes not very valid.
However, from another point of view, at present, iron ore** is mainly anchored in the overseas market of TSI CFR China Iron Ore (62% Iron Powder) Index ** traded in Singapore, and the Dalian Commodity Exchange varieties in the domestic market are more often passively followed. China is the world's largest steel producer and consumer, and the most important importer of iron ore, but it has not established its own iron ore pricing system.
Over the years, integrated circuit chips, iron ore and iron ore have been firmly occupying the top three positions in China's imported goods, after the dispute between China and the United States, around the chip neck problem, all levels have carried out a lot of work from top to bottom, from the national level of integrated circuits to all levels of local supporting industry guidance, development and major central enterprises initiated the establishment of various equity industries, since 2019, China's integrated circuit industry has made great progress, independent research and development production capacity has been significantly improved. Similarly, during the new crown epidemic and on the eve of the outbreak of the Russia-Ukraine conflict, China took advantage of the trough of the cycle and the strategic game of major oil-producing countries to sign a large number of import agreements with major oil exporting countries such as Saudi Arabia and Russia, so as to strive for long-term stable and suitable oil imports and maximize national strategic interests.
On the other hand, iron ore is also one of the "troika" of imported bulk commodities, which has remained high for many years, and has always been a lingering shadow in everyone's heart, after all, steel and many downstream industries have suffered from it in recent years, and the high cost of iron and steel industry has not only continuously eroded the profits of the entire industry, making it difficult for the steel industry chain to survive, but also the entire industry chain of the whole society has paid a heavy price for this, and finally the majority of consumers pay for it. Especially in the post-epidemic era, the recovery of the real economy is sluggish, many aspects need to reduce costs and increase efficiency, and the cost of raw materials for industrial products needs to be vigorously controlled. To this end, strive for the pricing power of the iron ore market, promote the return of iron ore to a reasonable range, establish an iron ore supply guarantee system, and realize the reduction of iron and steel industry and even the entire industrial production and many other problems need to be solved one by one, and all kinds of participants in the domestic market have a long way to go.
To exist is to be reasonable. Under the existing market logic and trading rules, commodity market hedging and pure speculation are reasonable and legal. Although there have been recent controversies in the market about the possible manipulation of domestic and foreign capital and even political factors in the iron ore market, and there have been alarm bells in the past "Hu Shitai incident", we have not had any definite evidence to confirm this speculation over the years. However, we should indeed take advantage of the "east wind" of iron ore that completely deviates from the fundamental logic and crazy speculation, and conduct a thorough investigation and combing of the industrial capital and speculative funds behind the three major foreign mines, China Iron and Steel Association, major steel mills, port merchants and the main seats of the exchange, so as to find out the truth of the matter.
Whether the iron ore anomaly ** is just a speculative capital push or there is another hidden story behind the scenes, it is time to uncover this Pandora's box.