Domestic steelmakers are not willing to purchase due to cost issues

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Recently, a cargo ship from Romania was docked at Caofeidian General Terminal, carrying 56,000 tons of iron ore on board. This is the first time that the port of Caofeidian welcomes Romania's iron ore.

This is a microcosm of the diversification of China's iron ore imports, but also clearly shows that: the global economic weakness has led to low steel demand in European countries, more European miners will be more iron ore exports to China.

However, the demand for iron ore in China is similarly sluggish. The situation of losses and low profit forces China's steel mills to take small batches and multiple batch operations, and rigorously controls the cost of charge purchases. This has made the miners, including the Big Three, more competitive in China.

According to the Hebei Entry-Exit Inspection and Quarantine Bureau, as of June, the country of origin of imported iron ore in the Caofeidian office has increased to 29. At present, in addition to major mines such as Australia, Brazil, India and Peru, iron ore mines from Japan, Sierra Leone, Honduras and Romania are gradually increasing.

According to data provided by Vale, China imported 690 million tons of iron ore in 2011, of which 300 million tons were imported from Australia and 130 million tons were supplied by Vale.

At present, Baosteel and other leading steel mills have drastically lowered their ex-factory prices in July. Most of the outsiders think that there is still room for decline in the post-market.

“Domestic steelmakers have not taken the initiative and are still keeping the principle of low prices and less mining of raw materials such as iron ore. Therefore, there is not much change in the actual trading volume in the market.” June 14, Baichuan Information Analyst Yan Ping said that the current iron ore inventory of steel mills has remained low.

In Yan Ping’s view, the current price hike is only the Australian mine, and the cost of the Australian mine is higher than that of other countries. The other foreign mines are very calm. “The price mentioned has gone up. It is imaginary and has not continued. And strong strength."

In fact, under the weak demand, the game between steel mills and traders is even more subtle, and the competition for miners who come to China to sell iron ore is even more apparent.

In the view of the top level of a large trading company in the north, at present, the Chinese side requires the miners to postpone the delivery of goods. “They tend to be behaviors of some traders, and the steel mills will still insist on shipping at a normal rate.”

Lange Steel Network analyst Zhang Lin told reporters that the three major miners in the quality of iron ore, high and low grades, the fundamental difference is not big, this time fighting is the price, "Although the steel mill may be signed with the miner four A five-year long-term contract, but I think the price and quantity have not been determined. If the price is not low enough, the steel mills will abandon it for the second time. Vale's high sea freight costs are the only injuries."

The reporter interviewed that the current domestic steel mills' willingness to purchase is not high, and there are no shortages of low-cost cargoes purchased by some steel companies for hedging costs. These low-cost cargoes are mainly from non-mainstream ores in Indonesia, Iran, and Malaysia. .

However, Qiu Yuecheng, senior analyst at the Nisshin Shinkansen, believes that this situation may not be sustainable. “Mill iron ore stocks at steel mills are significantly lower than the same period of last year. Once the market situation improves, there will be demand for stocks, and this may lead to a slight increase in imported ore prices. ”

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