Increase the demand for iron ore production higher volatility
The two quarter is the peak season for steel demand. As the temperature rises, the construction works will enter the best season of the year. The construction works in the northern area will also resume construction in succession, which will stimulate the demand for building steel products. Although the construction rate of the steel plant is rising, the supply pressure has not increased significantly, and the steel price still has a strong ability to move on. With the further improvement of the profit of steel enterprises, the demand for iron ore procurement will increase.
Industry chain analysis
(1) spot market
The first quarter of 2016, the international iron ore spot prices gradually rise, especially after the Spring Festival of the fluctuation, the Platts index by 44 dollars per ton in March 7th rose to a quarter high of $64.2, up by as much as 45%. On the whole because of the Spring Festival after steelworks replenishment and steel industry by the supply side reform effect of steel prices strong, support iron ore prices continued to rise; on the other hand, domestic ore driven by imported ore, the festival also maintain a rebound, steel procurement prices gradually rise, mine shipped smoothly, continue to reduce inventory. With the shift of social inventory to site inventory, steel prices continue to rebound, and the profitability of steel mills is good for ore demand. Therefore, the two quarter of iron ore prices will probably increase the price due to the behavior of replenishment of steel mills.
(two) import and export
According to the statistics of the customs, the import of iron ore and its concentrate in China in 1-2 month of 2016 was 158 million 800 thousand tons, and increased by 6.4% compared with the same period last year. Since March the traditional industry season, the government work report emphasized the steady growth, GDP growth in 2016 6.5%-7%, steady growth expected strong downstream demand gradually recovery, superposition years after the steel price trend is stronger, steel production in high spirits, blast furnace operating rate is expected to increase, iron ore demand will rise, the yield and the amount of iron ore imports expected market outlook the continuation of the strong.
(three) port stock
A quarter of the domestic iron ore port stocks of 1 tons are roughly in the near fluctuations, according to Mysteel statistics show that as of March 25th the country's 41 major iron ore port stocks full caliber is 96 million 307 thousand tons, 99 million 60 thousand tons compared to the beginning of January, a decrease of 2 million 760 thousand tons, a decline of 2.7%. As the current stock of iron ore port is relatively stable, the price of iron ore will rise to a certain extent. Although the PRI index has risen sharply and returns to $55 / ton, the short-term supply of iron ore has not increased significantly. But it is worth noting that the current steel mills have a certain resistance to the price of iron ore that has been rising too fast. Based on port inventory, there are plenty of resources, and the current ore procurement is more cautious, mostly based on the consumption of factory inventory.
(four) commencement rate
In the first quarter, the operation rate of domestic mine started to pick up, but the whole industry is still at a low level. Because the iron ore production capacity which has been released for nearly two years is not likely to be recovered in the short term, it is possible that the price of the iron ore will rise to a high level before it can attract the high cost mining enterprises to provide the supply. At present, a large mine operating at a rate of only 50%, medium-sized mines operating rate below 15%, while the small mines start rate is below 5%, the overall production is very low, and dominated by steel owned mines, private mines resume production is not much, said the majority of mine production until the two quarter. In addition, the price of domestic and foreign ore has returned to the mean value as the price of foreign ore has risen sharply. The price advantage of imported ore has been weakened. The large-scale substitution of imported ore to domestic ore will be weakened, and the demand for domestic ore will rise correspondingly.
(five) shipping market
A quarter of the BDI index showed Tandi rebound, since 1-2 month domestic holiday, the global maritime trade slowdown, BDI index fell to 473 from early January to mid February 295, fell over 35%, with the influence of the downstream replenishment demand and capacity to trade routes and other good, the coastal bulk shipping market supply and demand contradiction slightly eased, freight index bottomed out. By March 29th, the BDI index rose to 409, up 38% from the February low. On the whole, the current international airline market has bottomed out, and the ships that have been mostly concentrated in the domestic market have flooded into the foreign trade routes, and the pressure of the excess supply of market power has been eased. Both ends of demand and supply are welcome at the same time, and the supply and demand situation continues to improve, and the coastal coal price is stepping into the uplink.
(six) analysis of the downstream market
A quarter of rebar spot prices sharply higher, due to the macroeconomic policy focus in iron and steel production capacity to real estate and stock, the iron and steel supply and demand both ends of the formation of good market to enter the traditional peak season of consumption, supply and demand is expected to improve further strong, in addition to Tangshan World Horticultural Exposition park before the bull market support policy to limit production, so the price gradually go high.
In the two quarter, the low stock of construction steel will provide a basic support for the rise of steel price. On the whole, since last year, continuous steel mills have been forced to reduce production, resulting in relatively low market supply. The stock level in the circulation market, especially in Tangshan, is less than half of the stock market in the same period last year. But if the profit margins of steel mills in the two quarter still remain high, the steel plant's starting rate will be greatly improved. Therefore, we should pay attention to the changes of relevant factors such as social inventory, blast furnace start up, macro policy aspects, and the actual limitation of production in Tangshan steel plant.
Summary
Entering the two quarter will be the peak season for steel demand. As the temperature rises, the construction works will enter the best season in a year, and the construction works in the northern area will also resume construction in succession. In addition, all parts of the country have actively implemented the objectives of the two sessions and accelerated the infrastructure construction. Recently, a number of "iron, public and basic" railways and highways and infrastructure projects have been launched to boost the demand for construction steel. Although the construction rate of the steel plant is rising, the supply pressure has not increased significantly, and the steel price still has a strong ability to move on. With the further improvement of the profit of steel enterprises, the demand for iron ore procurement will increase. In the later period, we should pay close attention to the change of the construction and terminal demand of the steel plant. After the short-term adjustment of the iron ore, we should consider the layout of the medium line.
