In the face of market downturn, even the three major mines such as Rio Tinto can not be recovered. In the past three weeks, iron ore prices have started to fall wildly, but it is not a pleasure for steel companies with long-term contracts.
On July 8, the 62% grade price of the Singapore Exchange's iron ore swap contract in July has fallen to $119/ton, which is about 35% lower than the highest point in May. At present, the 62% grade price of imported ore futures in domestic ports has fallen below US$130/ton, which is about 28% lower than the highest point in May.
Iron ore swap broker FIS senior iron ore and freight derivatives broker Li Meng told the "First Financial Daily" that Indian iron ore prices have turned sharply, falling more than 35% in the last two months, while The volume of trading has also shrunk dramatically, almost stagnation.
Li Meng said that due to this influence, the international dry bulk freight rate market experienced a double-day market after entering the market in May. After hitting a new high in the year in May, it started under the leadership of the main capacity of the iron ore ship type Capesize ship. The plunge, and the Baltic Dry Index, hit a new low in recent months on July 8, and some spot contracts in the forward freight market (FFA) have struggled almost under the cost line.
For this round of price plunging, the analyst told the author, "The main reason is that the mentality has changed. In the early stage, everyone waited for the steel price to rebound, which led to the rebound of imported mines. But the billet not only did not rebound, but a new round appeared. Falling, so the trader's mentality has collapsed."
However, Han Weidong, director of the market management department of Hebei Iron and Steel Group, said in an interview with the author that more factors should be the macroeconomic impact.
According to statistics, the current domestic steel price index has hit a new low in a year.
Ge Wei, an analyst at the Iron and Steel Information Research Center, told the author that domestic demand continued to slow down, causing the domestic steel market price to break again and the market mentality was pessimistic.
From the iron ore swap contract price of the Singapore Exchange, the price after July is showing a downward trend. The 62% price of the swap contract in December this year has been suppressed to 113 US dollars / ton, and it will fall next year. To $111/ton, the market is pessimistic.
Domestic mines are cheaper than imported mines. The analyst told the author that the current domestic mine price has been suppressed even lower than the mine.
“It is difficult for steel mills to suppress imported mines, so they will suppress domestic mines. Domestic mine prices are currently about one or two hundred yuan cheaper than foreign mines.â€
The continued plunge in the spot price of iron ore further threatens the quarterly pricing model. Sun Ming Steel analyst Sun Ming believes that with the gradual decline in spot prices, the price difference between the spot price and the third-quarter long-term price is gradually expanding, and some factories with poor production and operation conditions will once again embark on the road of default.
Last month, Japanese steel companies reached a three-quarter price agreement with Australian mines, about $147 per ton, up about 23% from the previous quarter. However, domestic steel companies have not accepted this price.
There is no problem of breach of contract and non-default, because there are not many steel mills in the country to reach a written contract with the mine, which is a verbal agreement.
At the end of last month, some media quoted Rio Tinto CEO Tom Albanese as saying that if the spot price is lower than the quarterly price and the steelmakers demand to ship at a lower spot price, this may mark the end of quarterly pricing. .
Index pricing and even full spot prices are exactly what the mine hopes.
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