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SunSirs: Imported ore prices are mainly volatile upward
March 17 2020 10:31:09SunSirs(Molly)

Since March, domestic imported ore prices have maintained a narrow range of fluctuations, showing an overall "electrocardiogram" trend. The main factors that cause this kind of market are the following three points: first, the inventory continues to decline, market supply pressure is shrinking, and support prices are rising; second, steel mills start to stay low, demand for replenishment is tepid, dragging down prices; Third, the futures market fluctuates, affecting the mindset of miners and traders, causing prices to rise and fall. However, on the whole, the domestic fundamentals market for imported iron ore is still mostly positive, and prices still have a steady upward momentum.

According to SunSirs price data, as of March 13, the average price of 62% PB powder ore in Australia was 659 yuan / wet ton, Brazil's 63.5% coarse powder price was 695.88 yuan / wet ton, and 62% printing powder price was 602.5 Yuan / wet ton, respectively, rose by 1.12%, 0.27% and 1.43% from the beginning of March, and the year-on-year increases were 5.03%, 9.29% and 1.57%.

From the perspective of inventory: As of March 13, the inventory of 45 ports nationwide was 11.91113 million tons, which was a week-on-year decrease of 1.6634 million tons. Inventory levels reached a new low since the second half of the year, and have continued to fall for 6 weeks. The pressure on port supply has gradually eased, supporting Price increases. The decline in inventory levels was mainly due to the decline in both Australian and Brazilian mines. Data show that Australian mine inventory has fallen to 65.560 million tons, a record low in 13 weeks; Brazilian mine inventory has fallen to 30,755,500 tons, a record low since the National Day in 2018. The sharp decline of mainstream ore sources on the one hand shows that Australian fires and hurricanes have affected its shipping time for a long time, and the slow recovery of Brazilian miners' tailing dams has also taken a long time; on the other hand, domestic steel mills have gradually resumed work and ore consumption has increased. On the whole, the current inventory has dropped significantly from the previous period, and the price of minerals has an upward momentum.

From the demand side: as of March 13, the blast furnace operating rate of 247 steel plants nationwide was 72.59%, an increase of 0.35% week-on-week and a decrease of 1.28% year-on-year; the utilization rate of blast furnace ironmaking capacity was 73.90%, a week-on-month increase of 0.12%, year-on-year It fell by 2.68%; the average daily hot metal production was 2.0666 million tons, an increase of 33,300 tons week-on-week, and a year-on-year decrease of 75,100 tons. From the data itself, first of all, the steel mill has indeed resumed work, but after the overall resumption of work, its output has not increased significantly, and it has only maintained a relatively improved form. Secondly, compared with the same period of 2019, the overall level of start-up has dropped significantly. Therefore, the raw material consumption of iron ore has not significantly increased, or there is only a normal operation of reducing warehouses. The market demand is slightly tepid and drags down the mine. Price increases.

On the other hand, as of March 12, the average inventory of imported ore in steel mills for the current period was 25 days, a continuous decline of 4 cycles; and the total inventory of imported sintered powder also fell to 15.37665 million tons, a record low for two months, continuous It fell for 4 weeks; the average total inventory of imported ore dropped to 270,900 tons, which also reached a new low in 2 months and fell for 4 consecutive weeks. Therefore, it shows that under the current accelerated environment of resumption of work, steel mills still have motives for purchasing ore, and demand may pick up in the future.

Therefore, from the perspective of demand, the terminal manufacturing industry and the infrastructure industry have recently seen an acceleration of resumption of work, and the rise of the new infrastructure market has also brought new growth points to the market. Therefore, the replenishment demand of steel mills still exists, and the delayed release may induce a rise in ore prices in late March.

From the perspective of futures: after the rebound of iron ore's main contract at the end of February, the current wide-ranging shock appeared. The daily gains did not exceed the previous high. However, from the perspective of the random indicator KDJ line, the three lines continue to diverge upwards without crossing points, indicating a later upward trend. From the long-term indicator MACD line, the two lines are intertwined, and the gap is narrowed. Although the bar has been on the standard line, but the amount of energy is small, indicating that the main shock will continue in the later period, but there is an upward trend. Therefore, from a technical analysis, the price of goods and minerals may enter a slight rise in the next cycle, but the rise will shrink.

In summary, SunSirs analyst Hangsheng He believes that the current domestic fundamentals market for imported ore is in a "weak supply and demand" pattern, but demand may increase in the later period, but it is currently not strong. In the second half of March, the market may still maintain a narrow range of fluctuations, but the trend is mainly upward, and it is concerned whether the previous high has broken. On the other hand, although downstream materials have gradually been consumed, more spot resources are still on the way, and the phenomenon of short-outs is difficult to eliminate. In addition, the inventory continues to be high, and it is expected that the prices of finished materials may drag down mineral prices. Therefore, it is expected that the shock will continue in mid-March, and there may be a breakthrough in the latter part of the year. Spot prices are still expected to be in the range of 650-680 yuan/wet ton.

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