China's iron ore price index continues to decline

In July, the growth of steel demand in the domestic market was weak, the decline in steel prices increased, and the oversupply situation in the iron ore market became more apparent. The China Iron Ore Price Index (CIOPI) declined. Later iron ore prices will continue to show a downward trend.

1. China's iron ore price index continues to decline

At the end of July, the China Iron Ore Price Index (CIOPI) was 444.85 points, down 6.97 points month on month, a decrease of 1.54%. Among them: the domestic iron ore price index was 352.78 points, down 15.84 points, down 4.30%; the imported iron ore price index was 495.08 points, down 2.14 points, or 0.43%.

Second, the price of domestic iron concentrates has been downgraded, and the price of imported fine ore continues to decline.

At the end of July, the domestic iron ore concentrate price was 907.77 yuan / ton, a decrease of 40.75 yuan / ton, a decrease of 4.30%; the imported iron ore (fine ore) land price was 133.72 US dollars / ton, a decrease of 0.58 US dollars / ton, The decline was 0.43%, equivalent to RMB 990.73 yuan / ton, down 3.11 yuan / ton, a decrease of 0.31%.

From the weekly situation, domestic iron ore concentrate prices fell for four consecutive weeks; imported iron ore (fines) prices rose in the first two weeks and fell in the next two weeks.

Third, the analysis of iron ore price trend in the later period

Affected by the continued decline in demand growth, steel production declined slightly, and steel prices in the domestic market fell sharply. It is expected that iron ore demand will further weaken in the later period, and iron ore prices will show a downward trend.

1. Steel prices have accelerated to fall, and steel production has weakened demand for iron ore.

After three months of continuous decline, by the end of July, the Steel Association's CSPI domestic steel price index fell to 108.08 points, the lowest point in nearly 31 months; the month of July fell by 6.41%, the decrease was 4.67 higher than the previous month. The percentage point is the biggest monthly decline since this year. Affected by the sharp drop in steel prices, steel companies have adopted measures to reduce production and limit production, and steel production has also declined. According to the statistics of the Iron and Steel Association, the national crude steel output level in the first half of July was 1.982 million tons, down 25,000 tons from June's 2.07 million tons, a decrease of 1.25%. The decline in steel production has weakened the demand for iron ore in the domestic market.

2. The supply of iron ore has increased substantially, and the situation of oversupply has become more prominent.

From January to June, China's pig iron production increased by only 9.43 million tons, an increase of 2.9%. In the same period, the global production of pig iron and direct reduced iron (excluding China) increased by only 9.6 million tons. Except for China, the global production of pig iron and direct reduced iron was basically the same as that of the same period last year. The domestic iron ore (raw ore) output increased by 85.85 million tons, an increase of 16.7%; imported iron ore increased by 32.39 million tons, an increase of 9.7%; at the end of July, the imported iron ore port inventory rose to 97.74 million tons. For the second consecutive month, the chain increased by 930,000 tons, an increase of 0.96%. Compared with the same period of last year, it increased by 3.3 million tons, an increase of 3.49%. The increase in domestic and imported iron ore far exceeds the domestic demand for pig iron production. Imported iron ore stocks continue to rise, and the characteristics of oversupply are more prominent.

3. The profit of the steel industry continues to decline, and the price of iron ore still has a downward space.

According to the statistics of the Iron and Steel Association, from January to June, the accumulated profits and losses of the member companies of the Iron and Steel Association were only 2.385 billion yuan, a year-on-year decrease of 54.549 billion yuan, a decrease of 95.81%. If the investment income is deducted and the non-steel industry realizes the profit, the steel industry is a loss in the whole industry. Judging from the situation of the month, the whole industry suffered losses in January and February, and slightly profited in March, April and May. In June, there was another loss of 118 million yuan. According to the Iron and Steel Association, as of the end of July, the CSPI domestic steel price index fell to 108.08 points, down 10.27% from the beginning of the year; while the imported iron ore price was $133.72/ton, down only $0.05/ton from the beginning of the year, a decrease of 0.037. %, significantly less than the decline in steel prices. As the production cost of major international iron ore enterprises is far less than the current FOB price, coupled with the release of more domestic deposits and inventory risks, the iron ore prices will show a downward trend.