Iron ore supply and demand reversal or early arrival

A series of recent moves by iron ore giant Rio Tinto was rather intriguing: On the morning of the 1st, Rio Tinto and China Aluminum signed an agreement to establish a joint venture company to carry out mineral exploration business in China. On the evening of the 1st, Rio Tinto also held the “China Raw Materials Suppliers Conference” and announced that the amount of purchases in China this year would reach US$1 billion. From these Riot actions, we can see that in the future China will not only be an international mine sales market, but also a good supplier and partner. The transformation of this role of international mines in China will give domestic manufacturing companies a lot of opportunities.

In the past two years, the three major international mines have been in a strong position in exporting iron ore to China. When Rio Tinto came to China this time, it was surprising that many people were unaware of the fact that sales had strengthened the attitude of buyers and collaborators. In the eyes of the industry, this role change of Rio Tinto is due to the changes taking place in the market: iron ore is not as tight as it used to be.

“Although steel prices are relatively stable at present, the iron ore market is still a weak operation, ** purchases are almost stagnant, and the port spot is also rarely traded.” A trader said that on the 2nd, the price of Indian fines of 63.5% grade has been lowered. Explore the range of 175-177 US dollars / ton, some people see the market down to 170 US dollars / ton.

Due to the downturn in the spot market, international mines also lost their upward momentum in pricing third-quarter contract minerals. Vale said recently that the contract price in the third quarter will be flat in the second quarter. Prior to this, the second-quarter ore price rose by about 25% from the first quarter.

Analysts pointed out that with the slowdown in the growth of China's steel production and the large supply of domestic ore, the current price of imported iron ore, although hard to say, has reached an inflection point, but it has entered a “transition period” and may undergo major changes in the next year or two. Xu Lejiang, chairman of Baosteel Group, also said that the reversal of supply and demand of iron ore will come earlier.

Faced with this change in the iron ore market, international mines began to take precautions. The important point is that not only China is seen as a sales market, but it is a good partner. The transformation of the international mine's role will create opportunities for many Chinese manufacturing companies. Dang Shengrong, assistant general manager of Ningxia Huiye Magnesium Industry Group, pointed out that when supplying to international mines, prices are not the first priority. The supplier's continuous supply capability, as well as the company's safety production and environmental protection management system, is also very important to the latter.

In addition to providing qualified products, if you have excellent technical capabilities, it will allow domestic companies to have more room for development when working with international mines. International mines have rich mining experience, while Chinese companies have first-rate beneficiation technologies. Mining expert Jiao Yushu pointed out that the reason why China has world-class mineral processing technology is largely driven by the status quo of many poor mines in China. With fewer and fewer high-quality mineral resources in the world, Chinese companies can undoubtedly seize more opportunities in the future if they can exert their own technological advantages.