On May 23, the iron ore sector changed. The iron ore index rose more than 5% and closed up 4.91%. In terms of individual stocks, Shandong Jinling Mining Co.Ltd(000655) , Inner Mongolia Dazhong Mining Co.Ltd(001203) rose by the limit, Hainan Mining Co.Ltd(601969) rose by more than 6%, and Hbis Resources Co.Ltd(000923) rose by more than 5%.
On the news, the Indian government raised the export tariff of iron ore of different iron grades and varieties to 45% – 50% from May 22. Industry insiders pointed out that the imposition of high tariffs will lead to a significant increase in the export cost of Indian iron ore, which will affect the price.
iron ore price may increase
The iron ore futures market also rose sharply. According to the data, the iron ore 2209 contract closed at 863.5 yuan / ton, up 4.41%.
China Securities Co.Ltd(601066) futures pointed out that India is one of the non mainstream iron ore supply countries, and its iron ore is mainly exported to China. This time, the fine ore and lump ore are taxed by 50% and the pellet is taxed by 45%. The previous tax rate was 30%, and the cost of iron ore imported by China from India has increased by 15% – 20%.
According to Mysteel’s analysis, China is the main exporter of Indian iron ore. in 2021, China’s iron ore import volume was 1.12 billion tons, and the import volume from India was 334193 million tons, accounting for 3%. The additional tariff will significantly increase the export cost of Indian iron ore, and then affect the price. Iron ore prices may rise.
Some institutions believe that China’s dependence on imported Indian iron ore has gradually shrunk.
The relevant person in charge of the iron ore Department of Lange Iron and steel pointed out that in the first half of 2021, stimulated by the high iron ore price, China imported 25.83 million tons of Indian iron ore, a year-on-year increase of 29%, reaching a record high. With the price falling in the second half of 2021, China’s iron ore imports to India have shrunk rapidly. In the fourth quarter of 2021, the monthly import volume was only about 400000 tons. From January to April 2022, China imported 5.36 million tons of Indian iron ore, a year-on-year decrease of 71%.
“Judging from the classification of iron ore varieties imported from India, among the 5.36 million tons of iron ore imported by China in the first four months, the pellet volume was 3.162 million tons, accounting for 59% of the total. Judging from the current overall iron ore consumption in China, the pellet consumption decreased significantly. With the gradual increase of China’s mine output, China’s pellet will fill the position to a certain extent in the short term.” The relevant person in charge of the above Lange Iron and steel iron ore department pointed out.
the profit and output of steel industry are at a low level
From the performance of the downstream steel industry, the current profit and output of the steel industry are at a low level. As a raw material, the price rise of iron ore will have a certain impact on the cost of the iron and steel industry.
In terms of profit margin, the research report released on Everbright Securities Company Limited(601788) 5 May 22 shows that the average gross profit per ton of steel in the iron and steel industry is 171 yuan / ton, which has fallen to a new low in recent 10 months.
In terms of output, affected by the poor prosperity of downstream demand, the overall steel output is low.
According to the Research Report of Guosheng securities, the recent steel output has continued to decline, mainly due to the synchronous reduction of production of long and short processes of rebar and the increase of maintenance or production control of steel mills under the background of low profits. The output growth of subsequent steel mills may be limited.
From the first quarterly report of Listed Companies in the iron and steel industry, among the 35 listed companies in the iron and steel industry, the net profit of 7 companies increased year-on-year and month on month, and the gross profit margin of 20 companies improved month on month. Among them, the performance of special steel listed companies has improved significantly.
Since April, the demand for real estate and securities in the lower reaches of Huabao has decreased significantly due to the epidemic. With the continuous promotion of resumption of work and production in Shanghai, the impact of the epidemic has weakened. In addition, the “steady growth” policy has been strengthened, and the subsequent steel consumption is expected to be greatly improved.
