Iron ore agreement price decline can not stop the rise of steel prices

Australian mining giant Rio Tinto Group executives recently said that in the fourth quarter, the company's iron ore FOB price will fall by 13.3% to a "more sustainable level" of US$127. Earlier, there were also market participants who said that Brazil’s Vale has indicated that its ore prices will fall by 10% to US$135/t in the fourth quarter. In other words, due to the decline in prices in the third quarter and the reduction in demand, the iron ore contract price also fell for the first time this year.

The agreement price was lowered and the market price was not optimistic. At present, the offer price of Indian powder ore with 63.5% external grade is maintained at US$151-153/ton, and the price of 66% grade dry iron ore in Tangshan is RMB 1,210/ton, down 20 yuan/ton from last Friday. But what is strange is that from the point of view of the steel spot market, the steel price once again rose sharply yesterday. Dongxing ** report said that the three levels of rebar around the increase in the 30 ~ 100 yuan / ton, and did not correct the last weekend and the day before the rise.

Xi Chuan Shinkansen analyst Liu Qiuping explained that because the agreement price is reflected in the lagging price, and more is to make up for the losses in the third quarter of the steel mill, the market has not responded strongly to this news.

Iron ore spot market prices have also declined, but it will not affect the spot steel prices, because the cost of steel, in addition to ore, also involves the prices of billets, coke, and other raw materials, and the prices of these raw materials appear to be mixed. According to the monitoring data of the Nisshin Shinkansen line, as of September 3, the price of 20MnSi steel billet in Shanghai was 4,050 yuan/ton, up by 50 yuan/ton from last Friday; the scrap price in Jiangsu was 2,890 yuan/ton, which was higher than last Friday. RMB 50/t; Shanxi coke price is RMB 1,700/ton, which is RMB 20/ton higher than last Friday.

Even the domestic “power cuts” have run counter to the price of iron ore and steel. The Shanghai Interim Report stated that the recent operation of the iron ore market is in stark contrast to the performance of the domestic steel market. The implementation of power cuts and production cuts is indeed a bearish factor for the iron ore market. Because the ore mining and processing industry does not belong to the high-energy-consuming industries defined by the policy, the scope of the affected areas is limited. At the same time, the suppression of the steel industry's production capacity has fundamentally restrained the steel plant's demand for iron ore resources, thus affecting the entire market. Extremely adverse effects. Huang Huiwen, an analyst at the institution, said that in addition to the slight increase in iron ore market prices in some regions such as Liaoning, the rest of the region’s markets have recently mainly returned.