SMM News: the rise of iron ore this year, and once again refresh people's three values! On July 16, iron ore 1909 main contract opened early in the morning with a 3.7% rise in commodity futures, the price reached a high of 924.5 yuan / ton, the highest since December 2013.
Affected by the rise in iron ore prices, A-share listed companies can be described as "a few happy a few worries." Steel enterprises due to rising costs, the performance forecast is generally unsatisfactory; on the other hand, some of the main business "mining" listed companies, is expected to be driven by higher mining prices.
The price of "crazy iron ore" doubled this year
Iron ore continued to strengthen this week. Iron ore 1909 rose 2.34 per cent to Rmb895 a tonne on July 15. Mining prices opened up more than 4 per cent on July 16, reaching a five-year high of 924.5 yuan per tonne.
On the fundamentals, there are reports that the grade of Jinbuba powder has become worse, from 61% to 59.5%. If the news is true, it means that Jinbuba powder will not be able to meet the demand for iron ore delivery quality, which will undoubtedly add fuel to the fire for iron ore with reduced supply of high-grade iron ore. Driven by the news, iron ore rose sharply on Monday night and continued to rise on Tuesday.
It is worth noting that the iron ore period is now higher this year. Iron ore, the main futures contract, rose 95.43% from the beginning of 1909 to July 16, and the price nearly doubled. On the spot side, the Platts index traded at $121.4 a tonne as of July 15, up 67.8 per cent from the start of the year. Since the beginning of the year, due to the impact of mining disasters in Brazil and hurricanes in Australia, the supply of the four major mines has been significantly reduced, driving mining prices higher throughout the year. Between the beginning of the year and July 7, total shipments from Vale Brazil fell 20 per cent from a year earlier and 35 per cent from the previous month. In the later stage, driven by the resumption of Brutucu production and the fiscal year impulse of mainstream mines in Brazil and Australia, the shipping volume of mainstream mines is expected to increase.
On the other hand, economic data released on July 15 showed that real estate investment was resilient and infrastructure continued to pick up in the first half of the year. The growth rate of infrastructure investment in the January-June period was 4.1% higher than that of the same period last year, up 0.1 percentage points from the January-May period, while the growth rate of real estate development investment in the January-June period was 0.3 percentage points lower than that of the January-May period to 10.9%.
CIC Anxin futures analysis said that new real estate construction, investment, land acquisition and other data show that the resilience is still strong, infrastructure and other continued recovery, the central government once again stressed the "six stable" tone, the late "counter-cyclical" adjustment measures will still be pushed forward, at that time, it will form a strong support for infrastructure, real estate and manufacturing and other black downstream.
A share a few happy a few sorrows
As far as listed companies are concerned, the iron ore price center has moved up, and the profits of steel enterprises have been nibbled away. And some of the "home mine", or the main business of "mining" listed companies, profits are expected to improve significantly.
For steel enterprises, higher iron ore prices will raise steel costs and erode steel profits. According to CISA data, in May 2019, the total profits of Sinosteel member steel enterprises fell 18.15% compared with the same period last year, and the price of imported iron ore purchased by steel enterprises increased by 19.1% in the same period compared with the same period last year, which directly affected the efficiency of enterprises, while the asset-liability ratio of iron and steel enterprises was still as high as 63.96%.
The same situation is also reflected in the performance of listed companies. According to Wind data, as of July 16, a total of nine listed steel companies announced the results of the forecast, of which only three companies expected to increase profits in the first half of the year. Masteel shares, Shagang shares, Angang shares and Taiyuan Iron and Steel Co., Ltd. are expected to significantly reduce profits compared with the same period last year, of which the largest change is Angang shares, the net profit is expected to fall 67.3% compared with the same period last year.
Take Taiyuan Iron and Steel Co., Ltd., for example, the company's performance forecast shows that the first half of the year's net profit decreased by 57.68% to 61.21% compared with the same period last year. The reason given by the company is that steel prices fell in the first half of 2019 compared with the same period last year, while iron ore prices rose in large stocks, coal and coke prices were high, and the purchase and sales price difference of iron and steel enterprises narrowed compared with the same period last year, resulting in a decline in the company's performance.
On the other hand, some "home mine" listed companies are driven by higher mining prices. Wind integration of iron ore (Citic) and the SFC's old version of ferrous metal mining ingredients found that the texture of the more pure iron ore-related listed companies a total of 5. It is worth noting that after Hebei Xuangong experienced asset restructuring, "metal mining and processing" has accounted for 92.96% of the company's main business.
Of the five listed companies, Jinling Mining, Tibet Mining, Hebei Xuangong and Hongda Mining have all announced forecasts for the first half of the year. Among them, Jinling Mining and Hebei Xuangong results are expected to increase in the first half, both companies are expected to double the increase in net profit from the same period last year. HTC Mining, although not expected to negative net profit, but the loss is expected to shrink from the same period last year. The focus of the Tibetan mining industry has shifted to lithium salt products, and the chromite business has gradually shrunk.
Chuancai Securities analysis said that the iron ore fundamentals to maintain the gap pattern during the year, but taking into account the short-term futures sentiment adjustment, policy regulation risk increased, mining prices in the second half of the year may have the risk of correction. In the long run, with the end of the domestic and foreign production cycle, the bottleneck of iron ore asset production capacity has gradually emerged, and the long-term mine price equilibrium level is expected to be maintained at the domestic mine cost center of $80 to $100.
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