Tangshan limited production normalized iron ore continues to bear pressure

The spot iron ore market fell slightly last week. The latest price is $166 / ton, down $5.05 / ton from the previous week. The latest price of PB powder in Qingdao Port is 1138 yuan / ton, down 2 yuan / ton from the previous week. The latest price of Jinbu powder in Qingdao Port is 1102 yuan / ton, down 6 yuan / ton from the previous week. The iron ore 2105 contract closed last week at 1042 yuan per ton, down 17 yuan.

The policy of production restriction in Tangshan has entered the normal state.

On March 19, the Tangshan Municipal Government issued a draft notice on production and emission reduction measures for iron and steel enterprises, requiring that from 00: 00 on March 20 to 24:00 on December 31, the whole-process iron and steel enterprises in the city (except Qian'an of Shougang and Jingtang of Shougang) implement corresponding measures to limit production and reduce emissions. In terms of specific emission reduction ratio, Tangshan Songting Iron and Steel Co., Ltd., Tangshan medium and heavy Plate Co., Ltd., Hebei Xinda Iron and Steel Group Co., Ltd., Tangshan stainless Steel Co., Ltd., Tangshan Chunxing Special Steel Co., Ltd., Tangshan Jinma Iron and Steel Group Co., Ltd., Tangshan Donghua Iron and Steel Enterprise Group Co., Ltd. (including Kaiheng) and other seven iron and steel enterprises, Implementation of emission reduction measures to limit production by 50 per cent from 00: 00 on 20 March to 24:00 on 30 June; From 00: 00 on July 1 to 24:00 on December 31, we will implement emission reduction measures to limit production by 30 per cent. The remaining 16 steel mills implemented emission reduction measures to limit production by 30 per cent from 00: 00 on March 20 to 24:00 on December 31.

Mysteel investigated some iron and steel enterprises, and the steel companies did receive the draft notice. Some of the iron and steel enterprises involved have been strictly implemented in accordance with the requirements, and some enterprises will reformulate their production plans in accordance with the intensity of emission reduction in this notice.

If the documents can be strictly implemented, it is theoretically expected that 106000 tons of iron will be affected from 00 o'clock on March 20 to 24:00 on June 30, corresponding to a reduction of 1.19 million tons per week in weekly iron ore demand. From 00: 00 on July 1 to 24:00 on December 31, it affected 92000 tons of hot metal per day, corresponding to a weekly reduction of 1.03 million tons of iron ore demand and 290000 tons of coke demand per week. For the whole year, the annual iron aquatic capacity will be affected by about 27.8 million tons. according to the average operating rate of 80 per cent after eliminating the phase-out capacity, it is expected to affect the hot metal output of about 22.23 million tons, with a maximum impact on iron ore demand of 35.57 million tons.

The supply of iron ore gradually rebounded.

In the week of March 19th, Australian shipments rebounded month-on-month due to the return of normal weather in Australia, of which Rio Tinto shipped 4.27 million tons, an increase of 1.11 million tons compared with the previous week, and an increase of 320000 tons compared with the same period last year. FMG shipped 2.53 million tons, an increase of 70, 000 tons over the previous month and a decrease of 1.04 million tons over the same period last year. Vale's performance is relatively stable, with shipments of 4.29 million tons, a month-on-month decrease of 370000 tons and a year-on-year increase of 1.53 million tons. Vale's recent performance is stable. It is less affected by the extreme weather this year, and the performance of the four major mines is normal as a whole. In non-mainstream areas, Indian shipments remained high, while non-mainstream ore shipments returned to the high levels of the year. As the previous small peak of shipments has passed, the arrival volume of Port 45 has rebounded slightly from its low level this week, but the total volume is still not high. However, from a seasonal point of view, iron ore transport volume will gradually increase, if there is no sudden interference, iron ore supply will increase step by step, and reach a peak in the fourth quarter.

Port inventory continues to accumulate

Iron ore port inventory has accumulated for three consecutive weeks, and the inventory has returned to 130 million tons, a new high for the year. The inventory of the factory warehouse has been transferred to the warehouse because it continues to be lower than the daily consumption of steel mills. Due to the large decline of hot metal output in the week of March 19th, after the lifting of the strict production restrictions, the marginal recovery probability of hot metal output is larger, but the high probability of hot metal output is difficult to exceed 2.4 million tons per day, and the corresponding weekly demand for iron ore is about 23 million tons. In terms of inventory structure, the inventory of coarse powder continued to increase, the inventory of pellets and fine powder continued to decline, and the increase in lump ore supply led to a bottom rise in inventory. At present, based on the annual production limit policy in Tangshan area, the regular production limit suppresses the medium-and long-term demand expectation of iron ore, and the failure of steel mills to reach full production leads to a decline in the desirable inventory level of raw materials, so the expectation of replenishment is not strong, and the marginal demand for iron ore replenishment weakens.

Generally speaking, the overall pressure on the supply side is not great, and the current main contradiction lies in the demand side. In terms of short-term data, the tight balance is still maintained. Tangshan production limit theoretically affects the demand for iron ore for the whole year is about 35 million tons, but it is still necessary to observe the actual implementation of production restrictions. At the same time, the long-term reduction of crude steel production by the Ministry of Industry and Information Technology still constitutes pressure. According to a rough calculation, a reduction of 20 million tonnes of crude steel for the whole year would affect demand for 60 million tonnes of iron ore from March to December, which would undoubtedly have an impact on the balance sheet. However, due to the large basis difference, short-term unilateral shorting still has risks, so we can pay attention to the combination of multi-material empty iron ore. At the same time, the positive logic is still smooth. (author unit: Zhongzhou Futures)