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On September 30, 2021, the price of imported iron ore was 875 yuan/ton; on September 30, 2022, the price of imported iron ore was 784 yuan/ton, a drop of only 10.4%.
, as the main raw material, accounts for more than 55% of the steel production costs. The strong iron ore price will inevitably support the steel price, causing great trouble to the profits of steel mills.
The price of coke has dropped from a high of 4,000 yuan/ton to around 2,700 yuan this year, a drop of more than 30%, further showing the support role of imported iron ore prices on domestic steel prices.
The good news is that before the festival, Singapore iron ore futures swap index approaches the US$90 mark, which is far lower than the current domestic imported iron ore price, and also indicates that there is a large room for iron ore to fall in the future. In fact, drastic changes in the external environment will suppress the iron ore prices in Australia and Brazil.
has the following three reasons: 1. The exchange rate decline of the Australian and Brazilian currencies against the US dollar is much greater than that of the RMB against the US dollar, and the exchange rate factors may cause the price of iron ore to fall; 2. Since the second half of the year, the international market's maritime transportation costs have fallen sharply by more than 35%, and the downward trend of iron ore transportation costs has been established; 3. Global steel production has shifted from growth to decline, and iron ore demand has tended to shrink.
According to well-known institutions Goldman Sachs and Fitch's forecast report on the global iron ore market, the world's iron ore price will fall from US$90/ton to US$60/ton in 2023, a drop of more than 30%. Judging from the current global macroeconomic situation, this decline is very likely.
If the price of iron ore falls by more than 30%, does it also mean that the domestic steel price will still fall by 15%-20%? Perhaps it will be a preliminary response in the upcoming off-season of the steel market?
Yesterday, I read a steel market research report by Guosen Futures and I agree with it. The report pointed out that from the perspective of the global steel industry chain, there are major downward risks in the price of steel raw materials.
Under the double pressure of sluggish domestic and international steel demand, steel mills will be forced to take production cuts, which in turn forces the prices of steel raw materials iron ore and coke to fall.
Guosen Futures' report finally stated: With the deterioration of the external geopolitical environment, the USD index soared as a hedging tool, and it is not ruled out that there is a short-term problem with the liquidity of global commodities , which will lead to a significant increase in the probability of steel prices plummeting in the fourth quarter.
This article was first published: WeChat official account (latest steel price)
