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First quarter price drop
From the second quarter of this year, the traditional iron ore annual pricing contract was replaced by quarterly pricing. The long-term agreement price in the second quarter was mainly determined by the average spot price of iron ore from December last year to February this year. The long-term agreement price in the third quarter was mainly According to the average spot price of iron ore from March to May, the long-term agreement price in the fourth quarter is also determined based on the average spot price of iron ore from June to August.
Yesterday was the last day of August, which means that steel mills and mining companies have to negotiate the fourth quarter long exchange price based on the average spot price of iron ore in the past three months. Hu Kai, an analyst with United Metals, analyzed the "First Financial Daily" reporter. Since May this year, the price of domestic spot iron ore has experienced a sharp decline. During the period from May to June, the decline reached 24%. 25%, although there is a 13%~14% rebound in July-August, but there is still a gap of more than 20 US dollars/ton from the high point of April-May this year, which leads to the long-term contract ore price in the third quarter is always higher than the spot iron. Ore, 62% off-the-shelf iron ore price at the end of August CFR 145 US dollars / ton, lower than the Australian PB fine ore price of 10 US dollars / ton. However, the fall in spot prices will also cause the price of the long association in the fourth quarter to fall.
According to Hu Kaiâ€™s calculation, as of August 26, the average price of the index from June to August and 3 months was US$139.6/ton, which was lower than the average of the previous three months, but it was not obvious. During this period, Australia to China. The average freight rate is 9 US dollars / ton, equivalent to 10 US dollars dry freight, so it is estimated that the price of the Australian long association in the fourth quarter should be about 128 ~ 129 US dollars / ton, about 11% ~ 12% lower than the third quarter price.
Just recently, Brazilian media quoted Jose Carlos Martins, executive director of marketing, sales and strategic decision making in Vale, Brazil, as saying that the company plans to cut iron ore prices by 10% in October from $150 per ton to $135. This is part of Vale's quarterly price adjustment based on the China Spot Market Price Index. Meanwhile, Brazil's second-largest iron ore producer, Black Metallurgical, also plans to cut its iron ore prices in the fourth quarter from 8% to 10% in the previous quarter to about $140/ton, although this price is still higher than in 2009. Average price.
Steel companies in the second half are not optimistic
The expected decline in iron ore prices in the fourth quarter will be the first time this year that the new quarterly pricing system linked to the spot market triggered a price cut. However, Hu Kai pointed out that this does not reverse the current difficult situation of Chinese steel mills. "In the third quarter of this year, the price of Australian iron ore rose by US$26/ton from the second quarter, resulting in an increase of 274 yuan/ton in steelmaking costs, and 7~8. The monthly construction steel price fell by 300~400 yuan/ton compared with the second quarter, and the average price of sheet metal fell by 300 yuan/ton. Under the situation that steel production cannot be reduced, the industry status of 'high capacity, high inventory and high cost' in the fourth quarter will continue. ."
According to the latest report of the China Steel Association, the daily crude steel output in the first half of August was 1.719 million tons, an increase of 77,000 tons from the end of July, and it rose again after three consecutive months of decline. In this regard, Wu Wen, general manager of the domestic steel information institute Steel House, believes that the current domestic steel market is overcapacity, and the price increase will lead to a rapid increase in supply. In the third and fourth quarters, the domestic steel market demand will slow down significantly. Steel demand is lower than the second quarter. As a result, the general trend of steel market prices is the trend of shock operation.
During the recent online briefing session of Baosteel's 2010 semi-annual results, Ma Guoqiang, general manager of Baosteel Co., Ltd. also predicted that the company's iron ore cost in the fourth quarter will be lower than that in the third quarter, but the overall cost of iron ore in the first half of the year is higher. There has been a significant increase in the first half of the year.
At the same time, Ma Guoqiang also revealed that at present, the company's demand for products in the second half of the year has decreased compared with the first half of the year. The decline in domestic demand and the adjustment of export tax rebate policy have led to a decrease in export volume, which will cause domestic steel prices to bear the downward trend in the short term. Find the bottom pressure.
In fact, the profitability of domestic steel mills in July was less than the first half. According to the latest data of China Iron and Steel Association, in July, domestic large and medium-sized steel mills realized a total profit of 2.86 billion yuan, a decrease of 3.39 billion yuan from the previous month, a decrease of 54.24% from the previous month and a decrease of 73.05% year-on-year.
Several listed steel companies are not optimistic about the third-quarter performance forecast. For example, Angang Steel expects a single-quarter profit of RMB 450 million to a profit of RMB 150 million in the third quarter.
However, Liu Qiuping, chief analyst of the domestic steel spot trading platform, Xiben Shinkansen, pointed out that with the further deepening of national energy conservation and emission reduction, the production behavior of some steel enterprises may be subject to certain restrictions. From this perspective, it will be beneficial. Reduce post supply pressure.
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