[SMM analysis] how long will supply tightening iron ore continue to soar by more than 4 per cent mine end boost news to help fly?

SMM4, 8 April: after a brief pullback last Thursday, iron ore continued to soar on Monday, continuing to rise in intraday trading, with the main iron ore contract closing at 1905 yuan per ton, up 4.32 per cent by the end of the day. Since the end of March, iron ore prices have been rising, nearly six days, iron ore has increased by 13%.

At the same time, judging from Brazilian shipments, the port of Tubalang shipped about 2.25 million tons of iron ore per week in 2018, but about 1.9 million tons per week in late February. And the export of iron ore from Brazil's main port in early March fell by about 1.96 million tons, or more than 28 per cent, from late February. The impact of the Vale mine accident has begun to show up, and the arrival of Brazilian mines in Hong Kong is expected to decline in April. The contraction in the supply of Australian and Brazilian mines will strongly support the price of imported mines in April.

From the demand side, with the end of the heating season, the overall production restrictions in April will be relaxed. Taking Tangshan City as an example, the air pollution prevention and control plan of Tangshan City in April points out that more than 50% of the sintering machines and shaft furnace equipment will be stopped for iron and steel enterprises in Zunhua City, Qianxi County, Fengrun District and Yutian County from April 1 to 30. Lubei District, Kaiping District, Fengnan District, Guye District, Luanzhou Iron and Steel Enterprises stop more than 20% of the sintering machine, shaft furnace equipment. It can be seen that the production restriction area and the intensity of production restriction in Tangshan in April are more relaxed than those in the heating season, and the resumption of production of sintering equipment in some steel mills is expected to increase the demand for iron ore, which is good for ore prices.

However, because the current steel inventory is at a high level, and some blast furnaces resume production after the end of the heating season, the steel price or pressure operation in April. In the absence of a significant improvement in steel mill profits, iron ore prices may be suppressed. However, given the good performance of iron ore supply and demand fundamentals, SMM expects import prices to rise and fall in April, and the overall performance may be stronger than steel.

Market voice

Pacific Nonferrous Steel Yang Kunhe: global liquidity easing, as well as the recovery of China's PMI, a replenishment of the peak season, is the basic background of the overall strength of upstream resource products in the near future. As far as the black plate is concerned, the recovery in demand is expected to superimpose the sudden accident on the supply side, which leads to the strong operation of iron ore, which is the main support of finished products. At present, under the condition that the demand has not been falsified, and the liquidity is loose and the cost support is strong, the spot price may continue to be strong in the short term, but we are still looking at the central pullback in the medium to long term. As far as futures prices are concerned, there is a good chance that the discount repair will be completed at 1905 today, and the forward contract may have a stronger short-term trend than the recent contract.

Jingchuan, chief economist of CUHK futures: the impact of the Vale mine accident in Brazil and Hurricane Veronica in Australia on iron ore suppliers Rio Tinto and Billiton's ore production has significantly strengthened the futures market's expectations of weaker supply and output at the three major mines. It is expected that in the short term, the strength of iron ore futures will continue, and the market will continue to be affected by the production of the three major mines in the future. However, once there is the news that the impact of iron ore production is relatively certain, the adjustment of iron ore is inevitable.

Myco Futures: iron ore, Australian cyclone affected shipping, overseas supply remained low, transmitted to the first half of the domestic arrival in Hong Kong is expected to remain low, port stocks have signs of early deactivation; The stock of imported sinter in downstream steel mills is relatively low, and it may be replenished in the process of resuming production. Traders are optimistic that they will hoard goods and cherish sales in the future, and iron ore will rise rapidly in the short term. However, at present, the disk base gap repair space is limited and the exchange has put forward special measures for price changes caused by natural disasters, which may have an impact on bulls in the short term or have an impact on bulls, but it is still optimistic in the medium to long term based on fundamentals.

German futures: supply-side news frequently, iron ore finally ushered in a big rise under the promotion of Rio Tinto's force majeure, yesterday's current volume price rose, the basis has also greatly narrowed, has been flat. Iron ore still needs to pay attention to steel mill profits and iron ore inventory height, Brazil powder high inventory and super special powder inventory rapid decline can not be ignored, is expected to be alleviated in the second quarter. In April, iron ore was still difficult to fall in the face of blast furnace resumption, Australian hurricane, heavy rain + dam break in Brazil, falling expectations and strong timber prices, and did not rule out the possibility of continuing to rush higher.

Meerya Futures: after Vale announced that its production reduction forecast exceeded market expectations, BHP Billiton and Rio Tinto lowered their shipping forecasts one after another due to the damage caused by tropical cyclones, and the expected difference between the reduction of imported mine supply in the future expanded. Mining prices rose sharply to usher in four consecutive yang. Although the disk reaction is too strong, the situation of both supply and demand of ore fundamentals has not changed, mine shipments have dropped sharply to a record low, steel mills have started to rise, mining prices are expected to run at a high level in the short term, and there may be a pullback, and it is not recommended to catch up. Focus on long opportunities in the far month.