Fourth quarter iron ore price cut 13% steel prices rose again

In the fourth quarter, the price of iron ore ushered in the first drop this year. Due to the “Storm surge” of domestic energy conservation and emission reduction, domestic steel companies have reduced production, resulting in a continuous increase in steel prices, and even a day’s price increase.

Iron ore price cut 13%

Steel prices regained good news yesterday rose

In the fourth quarter, the price of iron ore ushered in the first drop this year. On September 8th, according to the Japan Economic News, the Australian mining giant Rio Tinto has reached an agreement with Japanese steel companies and agreed to reduce the price of iron ore by 13% in the fourth quarter.

Due to the “Storm surge” of domestic energy conservation and emission reduction, domestic steel companies have reduced production, resulting in a continuous increase in steel prices, and even a day’s price increase. According to "My Steel Net" statistics, the price increase of HRB40020MM rebar in Jinan on September 8 reached 300 yuan/ton, which was the largest increase in China.

The decline did not exceed expectations

“The decline in ore 13% in the fourth quarter is in anticipation. After all, quarterly prices are based on spot prices and index prices in the past few months.” Hu Yanping, an analyst at China United Iron and Steel Network, told the Morning Post reporter that this result is bearable for this year. For steelmakers with huge cost pressure, the pressure can ease slightly.

Luo Bingsheng, executive vice president of the China Iron and Steel Association, said that the current relationship between iron ore supply and demand has changed, and the global iron ore supply and demand situation has been different from the beginning of the year.

According to the data, China imported 360 million tons of iron ore from January to July this year, an increase of 5.25 million tons, an increase of 1.48%, and an increase of imports by 30.28 percentage points from the same period of last year. Since the second quarter, China has imported four consecutive iron ores. Monthly decline, iron ore imports in April fell by 2.94% year-on-year, fell 2.92% in May, decreased by 14.72% in June and decreased by 11.71% in July

Hu Yanping also said that the first drop in the price of ore also meant that the overall cost of steel production in the fourth quarter weakened accordingly. However, for the recent steel market, Hu Yanping said that this news will not have much negative impact, because the decline is not exceeding expectations, in addition to the recent domestic energy-saving emission reduction range is relatively wide.

Affected by power cuts, the domestic construction steel market prices continued to rise sharply on September 8. According to the market monitoring of Lange Steel Information Research Center, the average price of the domestic 6.5mm high line in key cities is 4,546 yuan (ton price, the same below), up 77 yuan from the previous day; the average price of domestic 25mm rebar is 4,416 yuan, rising 73 yuan. In terms of leading cities, Beijing's 6.5 high-line 4550 yuan rose 50 yuan, and the secondary rebar mainstream specification 4450 yuan rose 20 yuan.

Monthly pricing not reached agreement

In April of this year, the Big Three abandoned the annual iron ore price negotiation mechanism that lasted for nearly 40 years, and forced the implementation of quarterly pricing and index pricing. However, due to the sharp fluctuations in iron ore prices during the period from May to July this year, the mechanism for determining the supply price of iron ore by quarterly negotiations has once again been abandoned by the mines.

Regarding the pricing mechanism, although the mine is unilaterally implemented, Chinese steel companies still claim that iron ore is currently imported at a “provisional price” (ie quarterly price).

Not long ago, one of China's largest steel companies, Baosteel Co., Ltd. (6.94, -0.09, -1.28%), Chen Mi, said that since the three major mines in 2010 required a shortened iron ore pricing cycle, Chinese steel mills did not reach an agreement with the mine. With the mine settlement according to the quarterly tentative price, there is no agreement on the price in the third quarter, and it is expected that the price in the fourth quarter will decrease compared with the third quarter.

For monthly pricing, Hu Yanping estimates that “there is hardly a formal official negotiation result this year,” and states that “this is a mine’s act that ignores the interests of the demanding parties. If monthly prices are priced, steel production costs will fluctuate more.”