In the context of the volatile global economic environment, the iron ore market has ushered in a wave of heavy challenges recently. Since the beginning of the Year of the Dragon, iron ore has continued to be the first to arouse widespread attention and heated discussions in the market. In this changing moment, people can't help but think, what is the reason behind the decline of iron ore**? What does the future hold? This article will provide an in-depth analysis of the recent trend of the iron ore market, interpret the cause and effect relationship for readers, and help investors better grasp the pulse of the market.
Multi-factor superimposed iron ore is rapidly declining
Iron ore accounts for more than 60% of the cost of pig iron and is an important raw material closely related to the national economy. After the Spring Festival, the black series of commodities ** run, of which bifocals performed the strongest, but as of February 22**, the main contract of DCE iron ore ** has fallen below the 900 mark.
Liang Haikuan, a senior researcher at Founder Mid-term Research Institute, believes that "the high valuation of iron ore in the black series is the main reason. U.S. inflation and employment data in January exceeded expectations again, the market's expectations for the Fed to cut interest rates were postponed again, and the dollar index strengthened during the Spring Festival, which suppressed the valuation of iron ore to a certain extent. "After the holiday, the downstream construction site has not yet resumed work, and the inventory level of finished timber after the holiday this year is higher than last year, and the market still has hidden concerns about the peak season consumption of finished timber, and the demand in the peak season in the past two years is less than expected. Based on the consideration of risk prevention, the number of finished products sold on the thread has increased significantly, and the number of finished products has decreased, which has a negative impact on the iron ore at the charge end.
Hongyuan ** Bai Jing said, "According to the seasonal trend, the port dredging during the festival has dropped sharply, and most of the port inventory after the Spring Festival has shown continuous accumulation. From the demand side, the iron ore inventory of steel enterprises fell sharply during the festival, and the inventory is expected to replenish after the holiday, but due to the low profits of steel mills and the pessimistic impact of the expected demand for finished products, the recovery of hot metal production is less than expected, and it is expected that the inventory of 45 ports in the next period may continue to accumulate the trend. ”
Bai Jing believes that although there is no obvious contradiction in the fundamentals, affected by the pessimistic expectation of demand at the finished end and the recovery of molten iron production is less than expected, the spot price of iron ore after the holiday has shown a sharp trend, and the mine price continues to weaken. From the point of view, iron ore shipments are at a high level in the same season, Brazil shipments have a large year-on-year increase, and at the same time, the poor profit performance of steel mills and the abundant inventory of the port ** have put pressure on mine prices.
In addition, Liang Haikuan added that since the beginning of this year, the pace of shipments from foreign mines has been faster than in previous years, especially the shipments from Brazil, showing the characteristics of the off-season, and the absolute volume of shipments has exceeded the level before the mining disaster in 2019. The inventory of domestic iron ore ports continued to accumulate, and the contradiction of total volume began to appear. The fundamentals no longer support the early stage, and the superimposed technical situation has been broken, triggering a short-term rapid adjustment of the disk after the iron ore festival.
Mine price** is coming to an end?
Mysteel surveyed 247 steel mills with a blast furnace operating rate of 7637%, a decrease of 030%, a decrease of 3 compared to last year17%；The capacity utilization rate of blast furnace ironmaking is 8397%, an increase of 017%, a year-on-year decrease of 178%；The profitability of steel mills is 2554%, a decrease of 043%, a year-on-year decrease of 1039%；The average daily output of molten iron is 224560,000 tons, an increase of 0480,000 tons, a year-on-year decrease of 6250,000 tons.
The short-term downward adjustment of this round of iron ore is basically coming to an end, mainly due to the impact of market sentiment after the holiday. The medium-term angle iron ore ** is pessimistic, and the center will move up again. Domestic financial data in January exceeded expectations, with strong growth in credit and social finance, especially in M1. Liang Haikuan said that the issuance of trillions of treasury bonds in the fourth quarter of last year began to form a workload, and the issuance of PSL at the beginning of the year will give a certain boost to the demand for steel at the real estate end, and the demand for manufacturing is still strong, and the current order situation of steel mills is better. The total domestic demand for iron in the first quarter was not pessimistic.
According to Guantong** analysis, the performance of both ends of iron ore supply and demand after the holiday is a little lower than market expectations. Although the shipment of mines outside the terminal is in the seasonal off-season stage, the shipment and arrival are stronger than the same period last year, and the number of ships in the port is also at a high level, and the terminal is relatively abundant; On the demand side, the molten iron is running at a relatively low level, and the profit repair of steel mills is less than expected to inhibit the slope of molten iron repair, while the cold wave weather in the first week after the holiday affects the downstream resumption of work and the market's concern that the demand for the peak season is less than expected has increased the market's pessimism about the resumption of blast furnace production. In the short term, before the terminal demand is fully launched, the profitability of steel mills is difficult to be significantly repaired, and the enthusiasm for the resumption of blast furnace production is not good, and the fundamentals of iron ore are still under pressure.
Can iron ore be ** in the first quarter?
Baocheng ** Tu Weihua said that at this stage, the profitability of steel mills is not good, the momentum of steel mills resuming production after the holiday is not strong, and the demand for ore continues to be weak.
Guotai Junan** believes that although the macro expectations are strong during the Spring Festival, from the perspective of black fundamentals, the current industrial drive is relatively limited. For the downstream of steel mills, the scale of the resumption of work of end users has not been significantly started, although steel mills have replenishment needs, but the actual procurement is not urgent, buyers are mainly wait-and-see, and a small number of spot transactions mostly belong to downstream rigid demand. And the first of this round of charge will also help the profits of steel mills to partially repair to a certain extent, or pave the way for the arrival of the next peak season.
Looking forward to the first quarter, Liang Haikuan believes that the current round of adjustment of iron ore ** is not sustainable, and the 880 line below the 2405 contract should have strong support. After entering March, with the reversal of the market's pessimistic expectations for finished steel demand, the entire black series is expected to stop falling**. This year, the increase in foreign mine shipments is limited, and the output of hot metal is expected to continue to rise steadily, and the supply and demand of iron ore may tighten in stages at the end of the first quarter.
Liang Haikuan**, after entering March, the consumption of finished steel will gradually recover, and the recovery rate of hot metal production will accelerate. The demand for iron ore at the charge end will be boosted. The profits of steel mills have recently improved passively, and after entering the peak season, the profits will be transferred to the furnace end again, which will form a positive feedback on iron ore. Pessimistic about the trend of iron ore 2405 contract, it is expected to open in March**.