News summary
January-April 2024arcadestation, the domestic iron ore supply and demand pattern is relatively loose, and the country's cumulative inventories have increased by 28 million tons. Global iron ore supply has increased by 37 million tons, and consumption is expected to increase by approximately 30 million tons. Ore arrivals at domestic ports are expected to pick up, overseas supply will increase, iron ore fundamentals have not improved significantly, and there is limited room for upward movement in ore prices.
Newsletter text
[The trading logic of the steel market has changed, and the industry has experienced a double increase in supply and demand] Since April, the steel market has experienced a transformation from a fundamental improvement to a marginal deterioration, and the market has shown a trend of rebound first and then falling back. Entering mid-May, the trading logic turned to the combination of double increases in supply and demand and macro positives, and the market conditions once again ushered in a rise. [The steel industry is now a "game of thrones"] As the macro environment continues to improve, competition within the steel industry has become increasingly fierce. Market participants have different agendas and are facing changing trading logic, just like all parties in a palace drama. Continuously change positions for their own interests. [Some enterprises face elimination in the transformation and upgrading of the steel industry] This year, the steel industry has entered a critical period of transformation and upgrading, and some steel mills and steel trading enterprises are expected to be eliminated. While optimizing and upgrading industrial equipment and environmental protection systems, some steel mills also consider production egoism and do not fully consider market demand. [Iron ore supply and demand pattern is loose] From January to April 2024, domestic imports of iron ore increased by approximately 27 million tons, but domestic pig iron output dropped by 3.7 million tons, a year-on-year decrease of 1.1 million tonsarcadestation.3%, iron ore consumption fell by about 6 million tons. Domestic iron ore inventories increased by approximately 28 million tons, and the increase in global iron ore supply is estimated to be 37 million tons. [Overseas ore supply increases, domestic supply is high] Ore arrivals at domestic ports have declined, but overseas ore shipments have remained high, and domestic port arrivals are expected to pick up. Domestic mine production is active and iron ore supply remains high. The upward trend in high-value ore prices requires the coordination of fundamentals, while high supply and increased port deposits have resulted in no significant improvement in ore fundamentals. [Iron ore pricing power and price trend are controlled by power] The pricing power and price trend of iron ore are mainly controlled by Brazil and Australia. As a major steel production country, China is powerless in the face of "power" raw materials. [Macroeconomic Policies Regulate Steel Industry Chain] Macroeconomic policies play a key role in the steel industry chain. The relationship between policies and industrial structure is complex. The flexibility and protection mechanism of macro policies have become the "imperial sword" of industrial development. [The game between steel industry policy and industry is non-stop] The game between steel industry policy and industry has never stopped. From supply-side reform to industrial transformation and upgrading, the focus of policy regulation has gradually shifted from reducing crude steel output to output regulation to promote energy conservation, carbon reduction and enterprise transformation and upgrading. [Industry role competition and collaboration coexist] Steel mills, raw material merchants, and steel traders compete with each other in the face of interests, but also need to collaborate. Macro-control has become a means to balance the market, but the industry also needs multi-faceted coordination to overcome the difficulties of the industrial cycle.
