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Iron ore maintains wide oscillation pattern
Jul 16,2020 09:04CST
translation
Source:Futures daily
The content below was translated by Tencent automatically for reference.

SMM News: since July, iron ore futures show a unilateral upward trend. As of July 14, the main contract 2009 rose 2.34% to 838.5 yuan / ton. Spot, Platts index oscillatory upward, PB powder rose to 843 yuan / ton.

Domestic demand remains high

From the perspective of macroeconomic indicators, the construction industry has recovered quickly. The data show that from January to May, investment in infrastructure construction (excluding electricity) increased by-6.3% year-on-year, which was 5.5% higher than that in January-April; investment in real estate development increased by-0.3% year-on-year, up 3% from January to April; the sales area of commercial housing increased by-12.3% year-on-year, rebounding by 7% from January to April. The area of new housing starts increased by-12.8% over the same period last year, an increase of 5.6 percentage points from January to April.

At present, the terminal demand is mainly supported by two major factors: the rush of real estate construction and the improvement of infrastructure investment. For some time to come, infrastructure funds will be relatively abundant, and the intensity of construction is expected to continue. The rush of real estate construction is obvious, but from the data of land purchase and commercial housing transactions, the commercial housing transaction area and land transactions have fallen from high levels in July, indicating that after the release of compensatory demand in the early stage, the real estate market began to cool down. this will restrain the terminal demand for iron and steel to a certain extent.

Steel output remains stable

Recently, the utilization rate of blast furnace capacity has remained stable. Relevant data show that the actual utilization rate of blast furnace capacity of steel mills across the country is 85.7%, down 0.3 percentage points from the previous month. The output of hot metal fell slightly, with an average output of 2.478 million tons last Sunday, down 7000 tons from the previous month. The output of the five major varieties of steel was 10.76 million tons, up 40, 000 tons from the previous month, down 0.2% from the same period last year.

The price of scrap in East China rose 66 yuan / ton last week, and the current price difference between scrap and hot metal is above-55.8 yuan / ton. The economy of scrap is gradually emerging, which to a certain extent suppresses the further rise in iron ore prices.

The transportation of the four major mines rebounded.

Iron ore shipments fell this week. Shipments from Australia and Brazil totaled 21.68 million tons, down 2.34 million tons from the previous period. Australia shipped 15.77 million tons, a decrease of 1.43 million tons compared with the previous month. Of this total, Rio Tinto shipped 4.97 million tons, up 510000 tons from last week; BHP Billiton shipped 4.59 million tons, down 880000 tons from last week; and FMG shipped 3.36 million tons, up 230000 tons from last week. Brazil shipped 5.91 million tons, a decrease of 560000 tons compared with the previous month. Of this total, Vale shipped 5.37 million tons, a month-on-month decrease of 560000 tons. Iron ore shipments from Australia and Brazil rise seasonally in the third quarter of each year. Shipments in Australia are relatively stable in 2020; although the epidemic in Brazil is still fermenting, the overall impact is expected to be limited due to the high degree of mining automation. As a result, Vale has not lowered its annual guideline of 310 million-330 million tons. However, the tight supply of iron ore in Brazil is expected to continue throughout the year.

Generally speaking, the contradiction between supply and demand of iron ore has been reflected in the current price to a certain extent in the whole black industry chain. Follow-up still need to pay attention to the persistence of downstream demand. From the infrastructure side, due to the continued efforts of fiscal policy and adequate funds, the growth rate of infrastructure is expected to pick up quickly. While the real estate industry is affected by the pressure of the return of the average sales this year and the relative shortage of corporate funds, the continuity of construction is in doubt. At present, the profit of the steel mill on the disk is only about 140 yuan / ton, which has been repaired to a certain extent compared with the previous period, but it is still at a low level as a whole. Before the rebar has risen sharply, iron ore prices will still maintain a wide oscillation pattern.

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