[iron Ore Analysis] SMM 2017 Steel Plant burden ratio change and Analysis

Change and Analysis of burden ratio in 2017 Steel Plant

The results of burden ratio of domestic steel mills investigated by SMM show that the proportion of sinter, pellet and lump ore in domestic steel mills is 74.2%, 14.4% and 11.4% respectively in 2017. The proportion of sinter was 0.5% lower than that of last year, the proportion of pellet was 0.9% higher than that of last year, and the proportion of lump ore was 0.3% lower than that of last year. At the same time, the grade of domestic steel products in 2017 was 0.5% to 57.9% higher than that of last year.

Among them, the sinter distribution decreased by 0.5% compared with last year, mainly due to the environmental protection inspection of domestic steel mills became the norm in 2017, especially the limited production of weather pollution in Hebei region and the "2 ≤ 26" urban heating season, resulting in a significant decrease in the proportion of sinter. However, thanks to the high profits of steel mills, most steel mills prefer high-quality powder to improve sinter grade. As the profits of the steel mills gradually return to rationality, the steel mills may slightly increase the sinter ratio in 2018, but the grade of sinter into the furnace may decrease slightly with the increase of the use of medium and low grade ores in the steel mills.

According to the SMM data model, the average profits of thread and hot coil in 2017 were 921 yuan / ton and 843 yuan / ton, respectively. the thread profit increased by 830% over last year, and the hot coil profit rose by more than 38%. Therefore, in order to pursue more high-speed rail water production, steel mills have increased the pelletizing ratio. In addition, after the implementation of the winter production restriction, due to insufficient sintering, most steel mills have also increased the pelletizing ratio. SMM expects the mill's pellet ratio to fall slightly in 2018 as profits gradually return.

On the one hand, coke prices have continued to rise since the fourth quarter of last year. in 2017, the average price of Tangshan secondary metallurgical coke reached 1865 yuan per ton, up nearly 59 percent from last year's average price of 1173 yuan per ton. In order to reduce the cost, steel mills are reluctant to use lump ore as raw meal. On the other hand, at the end of the first quarter, the port spot PB powder, block price difference narrowed to 20 ≤ 25 yuan / ton low, steel mills have increased the use; The spread quickly widened to a new high of Rmb242 a tonne in late September, while lump premium climbed to a high of $0.4275 / dry tonnage. Subsequently, steel mills for the use of lump ore enthusiasm gradually cooled. Since December, as the powder price gap has continued to narrow and steel mills have increased their purchases of lump ore, SMM expects a small increase in the proportion of lump ore in 2018.