"This fact is inconsistent with the fact that the third-largest mine in the second quarter of this year kept passing through foreign investment banks and media issued a request to raise the FOB price of the FOB in the third quarter to US$160/ton." Analyst told reporters that the In the face of fluctuations in demand, even the short-term pricing mechanism does not necessarily guarantee that the Big Three will be able to guarantee the drought and flood protection.
From January to June, China imported 306.28 million tons of iron ore, up 4.1% year-on-year. Analysts said that the reason for the increase was because of the low base in the first half of 2009. In the first quarter of 2009, the steel industry was in a low recovery stage. In the second quarter of 2010, as the price of steel fell, the market entered an adjustment. In June, China imported 47.17 million tons of iron ore, a decrease of 4.73 million tons from the previous month. "This is a three-month decline since 2010." Zhang Lin said.
According to market monitoring, from mid-April to mid-July, during the three months, import mines fell by 35.5%. The domestic mines have fallen by 23.6%. Although the import mines have seen a large drop, there is still some room for decline.
Analysts believe that taking into account a variety of factors, China's steel mills still have very few production cuts for blast furnaces. If the marginal cost is exceeded and steel prices continue to fall, steel mills will be unable to sustain the market. This invisible hand will force steel companies to reduce production. At that time, the demand for imported ore will suddenly drop, and the price of imported ore will slide to freezing point.
Analysts said that overall, in the first half of 2010, China’s consumption of iron ore is still at a high level. In the second half of the year, there are many uncertainties in the economic factors. Once the sole user of ore, steel companies are under pressure from the market, they are forced to Due to environmental pressures and the pressure to remove the newly-built offending projects, we choose to reduce production and seek a balance between supply and demand in the domestic steel market. The consumption of ores will certainly shrink in the second half of the year, and the imported mines will even slide even lower, returning to their true Value point. “Foreign miners in foreign countries can easily take most of the wealth of the steel industry into their pockets, and this may not happen again,†the analyst said.
In addition, the temptation of huge profits is to promote the rapid expansion of new production capacity of foreign mines, which will also be a potential factor affecting the price trend of the iron ore market. As of May 2010, about 685 million tons of new capacity projects are being built in hot weather, and these production capacities will be put into production from 2010 to 2012. In the next three years after 2012, another 400 million tons of new capacity will be put into operation. As expected at the United Nations Conference on Trade and Development: If the three major mining giants do not control the production of new projects well, the risk of overcapacity in iron ore is still quite high.