Price rises, quality declines, iron ore imports tend to diversify

By July 2011, China’s iron ore import source countries had risen to 58, an increase of 18 over the same period last year. In addition, statistics show that iron ore imports from non-traditional trade zones have risen sharply. In July this year, China imported 95.62 million tons of iron ore from the traditional trading regions of Australia, Brazil and India, a significant increase of 40% year-on-year. The proportion of total imports reached 24.6%, compared with 18.9% in 2010. China's iron ore importing countries are becoming more diversified, and at the same time there is a sound of smoldering iron ore in the market. However, the data also reveals the helplessness of the ore importers. The diversification of iron ore importing countries is not an active choice. The price of China's imported ore market is rising and the quality decline is difficult to reverse. The market situation may be more severe in the future. Domestic steel production remained steady rise, driving the growth in demand, the other side is the dominance of traditional mining enterprises to strengthen. Under the dual drive, ore importers have increased their overseas prospecting and explored more emerging mineral sources, resulting in a significant increase in the number of iron ore sources. However, the development of new mines has obvious risks and benefits. After the diversification of China's iron ore importing countries, the increase in ore source has not stabilized the ore trading, but has caused various problems. In the first half of this year, the price of imported ore has risen and fallen, and the price of iron ore has increased while the quality of ore has declined. On the one hand, the price of imported iron ore has risen sharply. Under the influence of floods and so-called accidents in the production of international mining enterprises, as well as India's increase in tariffs and restrictions on export, import and mining enterprises are striving to expand their mines. The diversification of iron ore importing countries is passive, and it has not brought the market's oversupply. The direct performance is that the import price of iron ore has risen steadily, and the price increase has far exceeded the increase in imports. In July 2011, China imported 54.55 million tons of iron ore, a year-on-year increase of 6.5%, but the average import price reached 173.2 US dollars / ton, the price rose 22.7%. In addition, the quality of iron ore imports has declined. The grade of imported iron ore in China has dropped significantly. The China Iron and Steel Association announced that the average grade of imported iron ore in 2010 was 61.7%, down 0.57 percentage points from 62.27% in 2009. In addition, after the expansion of the source of imports, the quality of iron ore that was not previously concerned has become a prominent event in the past year. In the first half of this year, unqualified ore was frequently found in the ports of Qingdao Port, Jingtang Port and Nantong in China, accounting for 20% to 30% of the import volume. The water, impurities and grades did not meet the requirements, and contained silica, sulphur-phosphorus cobalt. Problems such as vanadium and other impurity elements. The quality of iron ore is declining, but the source of iron ore imports will continue to diversify. What causes imported miners to expand their import sources. In fact, the root cause lies in the fundamental changes in China's import mine market since this year. Iron ore trading is dominated by traditional agreements and mines, and the contract is more short-term and spot-based. This year, BHP Billiton decided to adopt a monthly iron ore pricing mechanism. The end of the long coal mine is dead, the quarterly mine has not been implemented for one year, and the miners have started a major change to the agreement mine. BHP Billiton's monthly pricing method is more similar to that of Indian spot mine suppliers, rather than the traditional long-term mine. If the quarterly mine is the castrated version of Changxie Mine, then the Australian monthly mine is actually a deformation of the spot mine. Rio Tinto keeps up with the strategy. At the beginning of the year, Rio Tinto, who was still half-faced, finally adopted the monthly pricing mechanism in July after the expiration of the agreement. This time, Rio Tinto has changed the pattern of China's imported ore market. The iron ore supplied by the two extensions accounts for one-third of the national import volume, plus the existing spot mine share such as India, the imported ore is spotted, and it is the main part of China's imported iron ore. India’s iron ore exports have fallen sharply. After BHP Billiton and Rio Tinto have faded out of the quarterly mining market, Brazil's Vale strives to promote the ore distribution center. Similarly, the spot mine market itself has changed, that is, the decline of Indian mines. Due to rising domestic demand in India, local governments have restricted exports and export tariffs by 15%, which has led to a decline in Indian mine exports. The Indian Mining Union FIMI expects India's iron ore exports to fall by more than 20% in fiscal 2011, from about 95 million tons in the previous fiscal year to around 75 million tons. The expansion of the source of imports and the decline in the grade of ore have not caused concern in the industry. Instead, the sound of singer iron ore has appeared. But the singer can not control the market, experts pointed out that in a long period of time, the iron ore market pattern is difficult to change, small waves are difficult to change the dominant position of the ore enterprises. The important fulcrum of the current singer is that the iron ore suppliers led by the three major mines are increasing their production. The global iron ore production and export will grow rapidly in the next five years. In 2012, the global iron ore output will reach 2.28 billion tons. It will reach 2.7 billion tons in 2015. However, the market supply is far from optimistic. According to the data, the global iron ore output in 2010 was about 1.85 billion tons, an increase of 12.8% over 2009. Based on this calculation, global iron ore growth rate will average 11% per annum by 2012, and by 2015, the average annual growth rate will be 7.9% in five years. Also, the key point is that the increase in output does not necessarily weaken the monopoly of the industry. With the quality of mineral deposits in hand, the monopoly of the three major mines may even increase. The current fact is that the world's high-quality mineral deposits have been basically divided. In the last century, world-wide mine exploration and high-quality mineral deposits were successively collected by international mining companies. In the 1970s and 1980s, Japanese companies took the last bus and took a wide share of the mining companies. At present, the high-grade mineral deposits that can be directly imported into the furnace have already been masters, and there are few opportunities left for Chinese enterprises. Of course, there is no chance at all. Occasionally, there are bones that are not good, and it is the turn of small and medium-sized mining enterprises and Chinese enterprises. For example, Chinalco participates in the West Mangdu iron ore in West Africa. With the mining crisis, it has intervened in the Simandu high-grade iron ore to obtain part of the equity, but the mining operation is still in the hands of Rio Tinto. There is also a reason that the grade of ore is declining and the cost of mining is rising, which will limit the effective supply of ore. The average grade of imported mines has fallen, and the same problems are faced in China. In December 2008, the average ore grade of large and medium-sized iron ore dressing plants averaged 30.2%. By the second quarter of this year, this indicator fell to 27.8%, down 2.4 percentage points in two years. Therefore, even if new investment is poured into mining, due to the low quality of ore, the new effective supply is still tilted to the three major mining companies, and the supply advantages of the three major mines cannot be realized within a few years. At present, the World Steel Association released that in the first half of 2011, the output of crude steel of 64 association members was estimated to be about 758 million tons, an increase of 7.6% over the same period in 2010. China's steel production accounted for 46.3% of the world's total output. In the first half of the year, the cumulative crude steel output was about 351 million tons, a year-on-year increase of 9.6%. The decade before 2010 is a decade of China's demand explosion, and China's steel demand has grown at an average annual growth rate of 17%. According to the data, in 2010, China's per capita steel consumption was 427.4 kilograms, more than twice the world average of 202.7 kilograms. After entering 2011, China's steel development has passed a peak period and signs of slowing down began to appear. But at the same time, we must also know that China's urbanization process has not yet ended, and even if it is growing at a faster rate, it still maintains a high growth. Before 2020, steel production capacity will continue to grow, maintaining an average growth rate of 7%, which can match China's economic and urban construction needs. In the future, China's per capita steel consumption peak will reach 600 kg or more. Before China's steel demand has yet to reach its peak, another country with more than 1.2 billion people, India, has embarked on the threshold of industrialization. In 2010, India's per capita GDP reached 1,342 US dollars, which is already at the initial stage of steel consumption growth. From 2005 to 2010, India's per capita steel consumption increased by 7.8% in five years. Of course, India's current steel consumption is still at a low level. In 2010, India's per capita steel consumption was only 51.7 kilograms, which is 25% of the world average, equivalent to the level of China in the early 1990s. But coincidentally, China's steel production broke out in the 1990s. In 1990, China's per capita steel output was 58 kg. In the following decade, it maintained an annual growth rate of 6.8%. In 2010, the steel output was 130 million tons. It maintained a 17% annual growth rate, and the output in 2010 reached 627 million tons. Moreover, the current moderate growth rate of Indian steel consumption has affected the global iron ore pattern, and the amount of Indian ore imported from China has dropped significantly. In the first half of this year, the total import of Indian iron ore was 4,985,700 tons, a decrease of 23%. In the first half of the year, the proportion of printed ore in China's imported iron ore decreased significantly, from 20.9% last year to 14.9%. Based on comprehensive judgment, India's steel consumption is on the eve of explosive growth. In the next decade, India is likely to become the fastest growing steel producer in the world. India's iron ore demand will maintain steady growth. According to estimates, India's steel consumption per capita is 80 kilograms in 2015, and after 2015, India's steel demand will increase. In 2015, it may be a key node. China’s demographic dividend has subsided and steel consumption has slowed significantly. India has benefited from a young population structure, a step in the economy, and the pace of urbanization will be further accelerated, which will increase the demand for iron ore. Just as China once exported oil and coal to earn foreign exchange, and now needs to import large amounts of resources, India, which now exports iron ore, will become the main importer of iron ore in the future.

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