Will Iron ore prices fall again

With the deepening of the adjustment of industrial structure, steel, and soaring demand for iron ore has not appeared, and under the background of increasing miners ore supply, don’t rule out the possibility of iron ore tonnage price dropped to $40 to 50. Experts predict that in the first quarter ore imports or to 230 million tons, up 4% from a year earlier, only a quarter of the growth rate for the same period of last year.

On March 10, the associated 62% ore index continued to fall 1.29% to $57.25 / ton, to new lows. At the same time, the domestic steel market were not much better.

Faced with enormous pressure, some will hope in the national development and reform commission has approved on multiple projects, trying to share 7 trillion yuan investment “stimulus” steel mills, ore traders to a better life. But xu shaoshi, director of the national development and reform commission (NDRC) during the two conferences responded that “strong stimulation” is a misreading of $7 trillion. I steel net information director xiang-chun xu is the truth, the national development and reform commission has approved investment is in order to reverse the economic decline, without any increase in demand for steel, iron ore. In the future supply of excess, under the background of weak demand, did not rule out the iron ore tonnage price dropped to $40 to 50, and the possibility of iron ore import growth rate into the era of low single digits.

The excess supply is to blame

On March 5, 62% ore related index fell below $60 to $59.75 / ton, a new low for six years. 10, the index continued to dip to 57.25 dollars/ton. “The deep reason of falling prices is the excess supply of iron ore.” Xiang-chun xu said. It is reported that BHP billiton to set the current fiscal year iron ore production targets for 225 million tons, and before the year is 204 million tons; Rio tinto group plan production 330 million tons of iron ore this year, and 2014 of 295 million tons. Vale is expected to produce 340 million tons of iron ore.

Such as downstream demand can digest the increasing supply of iron ore, it is not a problem. But as the world’s largest buyer of Chinese iron ore market is due to the economic transformation, the slowdown in demand for iron ore, in the iron ore prices fell pain points.

Since this year, hong kong-listed suffered “pollen. Line price below 2300 yuan, hot rolled coil plate prices fell below $2400… Increasingly lower steel prices underscored the domestic steel demand downturn. At the same time, affected by boron steel export tax rebates cancellation policy, China’s steel exports fell 24.2% in February.

Low domestic demand and export the plight of poor suppresses the iron ore import demand. In February, according to China’s imports of iron ore 67.94 million tons, fell 13.53%, appear fell for a second consecutive month.

Prices may continue to fall

In spite of the iron ore prices have continued to fall, xiang-chun xu said, “so far still did not see the flagging reverse signs”.

Industry experts pointed out that the boron steel export tax rebates cancellation policy or will continue to ferment, total exports decline or will continue to march, the domestic steel pressure digestion.

The government work report points out that in 2015 China’s economic growth target is 7%. According to incomplete statistics, since October last year, the national development and reform commission has approved 49 project. “If all goes well, the investment will be gradually released, combined with the multiplier effect, is expected to form a strong steel buying power.” Analyst said, “but the key question is, can have approval of investment projects in the first half of this year in all or most of the work, the formation of concrete building construction and building materials purchase demand?”

To say the least, even if most of these projects can start, “the investment is to reverse the economic decline, more stable demand, without any increase in steel, iron ore demand.” Xiang-chun xu said.

“China’s industrial structure adjustment, dominated by industry leading to the service industry to speed up the transformation. At present, the heavy chemical industry, real estate development, investment in infrastructure construction has been a rapid growth.” Sadie, a think-tank, associate researcher HeRongLiang said, “the growing demand for iron ore co., LTD.”

Xiang-chun xu is expected, with the deepening of the adjustment of industrial structure, steel, iron ore demand has not soaring, and under the background of increasing miners ore supply, don’t rule out the possibility of iron ore tonnage price dropped to $40 to 50. Experts predict that in the first quarter ore imports or to 230 million tons, up 4% from a year earlier, only a quarter of the growth rate for the same period of last year.