Since the beginning of the year, the national development and Reform Commission, the State Administration of market supervision and other departments have made intensive voices to strengthen the supervision of the iron ore market, and the iron ore price has also fallen sharply. In contrast, the share price of listed steel enterprises rose significantly.
Zhu shaonan, an analyst of Soochow futures industry, told the financial Associated Press: "previously, the iron ore inventory in the port has been continuously high, and at present, the production restriction of steel enterprises is still strict, and the iron ore price has been rising, including some speculation expectations. The recent conference policy requires traders not to hype on the one hand, and major enterprises to take the lead in ensuring supply on the other hand." At the same time, he believes that with the loose expectation of steel supply and demand structure, the profit per ton of steel may be reduced accordingly.
Two "warning meetings" dampened the enthusiasm of iron ore speculation
On February 11, when the price of iron ore "rose just in time", the national development and Reform Commission and other three ministries and commissions issued a document to hold a "special meeting on iron ore reminder and warning" on February 15, requiring Minmetals, CITIC metal and other state-owned enterprises to participate. As soon as this notice was issued, the price of iron ore futures fell and closed at the lowest point of the day. On the day of the 15th meeting, the price of iron ore fell by the limit.
Since then, on the 17th, the national development and Reform Commission and the State Administration of market supervision once again interviewed a number of traders to hold a "special meeting on reminding and warning". The intensity of the meeting reminded the market of the previous coal regulation. By the 17th, the maximum decline of the main contracts of iron ore futures had exceeded 20%, which dampened the enthusiasm of bulls in the market.
According to insiders, these two meetings have a certain cooling effect on the price of iron ore. on the one hand, the traders attending the meeting said that the current inventory is high and the hedging ratio is 80-100%; On the other hand, the leaders of various departments also asked the participating enterprises to play a leading role in maintaining order and ensuring the smooth operation of the market.
A trader in Tangshan told the financial Associated Press: "now the industry's general understanding of the meeting is that steel, as an industrial grain, should be within a reasonable price range and ensure the normal supply of the market, and can not affect the downstream construction."
Analysts believe that the recent iron ore related policies have certain market foresight. Zhu shaonan, an analyst of Soochow futures industry, told the Associated Press: "Iron ore stocks are high at the port and the supply-demand structure is loose. If the price is not well controlled now, the iron ore price may rise sharply after the resumption of production in March. Therefore, during the current period of poor relative demand, the continuous introduction of supply guarantee policies can avoid the sharp rise of future prices."
Is the decline in iron ore prices conducive to the improvement of steel enterprises' profits? The shares of listed steel enterprises have generally risen recently
After the meeting, iron ore prices fell sharply, but related concept stocks rose generally. On the 16th, the steel concept index rose by 1.8%, and on the 18th, it rose again by 2.9%, of which Jiangsu Shagang Co.Ltd(002075) rose by the limit.
Some analysts believe that, on the one hand, the rise of steel concept stocks is due to the good performance expectations of some steel enterprises last year. At present, the annual report period is approaching, and the market enthusiasm begins to improve; On the other hand, the cost of steel enterprises is expected to be controlled or relatively benefited after the decline of iron ore price.
According to the statistics of the National Bureau of ferrous metal industry, the operating revenue increased by 66.2% year-on-year to 96.2% in 2023; The operating cost was 8849.81 billion yuan, a year-on-year increase of 31.0%; The total profit was 424.09 billion yuan, a year-on-year increase of 75.5%. According to the statistics of the financial Associated Press, 29 listed companies of steel enterprises have issued performance forecasts for 2021. Among them, only three companies expect the net profit to decline year-on-year, while the rest expect the net profit to increase to varying degrees, Bengang Steel Plates Co.Ltd(000761) (000761. SZ) expects the net profit to increase by 624% year-on-year in 2021.
This time, with the decline of iron ore prices, the market expects that iron and steel enterprises may also benefit. However, according to analysts, the rise of steel prices will be transmitted to the downstream manufacturing industry along the industrial chain, squeezing the profits of the manufacturing industry, which is not conducive to the stable investment of the manufacturing industry, and the price of steel is expected to fall.
According to Zhu shaonan's introduction to the financial Associated Press: "as the market expects that the double carbon demand this year is somewhat flat compared with the previous requirements, under the background of steady growth, the supply side is expected to recover better, the steel supply and demand structure may be relatively loose, and the profit per ton of steel this year is expected to be reduced to a certain extent."
According to the analysis of Dr. Wang Guoqing, director of Lange Iron and Steel Research Center: "it is expected that the average national comprehensive steel price index of Lange Iron and steel will be about 4800 yuan in 2022, down about 10% year-on-year."
