Demand exceeded expectations, iron ore prices soared 47%
The rise of iron ore price is mainly affected by supply and demand. On the demand side, infrastructure construction in the second quarter of China was in a hurry, stimulating a substantial increase in demand for iron ore. According to the National Bureau of statistics, the average daily output of crude steel in May this year reached a record high of 2.976 million tons. At the same time, iron ore stocks are running low. As of June 19, the total iron ore inventory of 45 ports in China was 106.17 million tons, a new low since October 2016.
On the supply side, on June 6, Brazils mining giant vale itabila comprehensive mining area was shut down, which led to the markets expectation of the reduction of iron ore supply, stimulating the further rise of iron ore prices. On Thursday, the mine was announced to be allowed to reopen, in part easing supply concerns. However, Baocheng futures believes that although the epidemic affected the global supply of iron ore, non mainstream mines and vale did reduce their production, Australias production was also significantly increased. In addition, overseas demand for iron ore returned to China, domestic supply of iron ore did not shrink as expected.
Most analysts believe that at this stage, iron ore pricing is mainly based on fundamentals. Although the supply or recovery of iron ore in the future is high, there is a high degree of certainty on the demand side of iron ore and the price is supportive before the steel mills actually reduce production.
Steel stocks old trees bloom, leading the rise strongly
The Shenwan iron and steel industry index rose 5.98% this week, leading gains in both markets. Nangang shares soared more than 30%, Chongqing Iron and steel gained the third consecutive board, up 27% in a week, and CITIC special steel, Xining Special Steel and Shougang shares all rose more than 10%.
In addition to steel, coal plate also changed. Anyuan coal industry has reaped two consecutive trading plates, with Zhengzhou coal power and Jinneng technology both up more than 10% this week.
According to the agency, the rise of steel stocks this week is related to the hot market speculation about the concept of steel + IDC. Shagang Co., Ltd. and HANGGANG Co., Ltd. have gained significantly more than other steel stocks in recent years due to the layout of IDC business. With this boost, other steel stocks have also begun to gain favor of funds in the near future, while coal stocks are more likely to follow up.
Huatai Securities expects steel prices to fluctuate and coal boom or rebound in the second half of this year: 1) steel supply and demand are booming, actual production capacity or expansion at the supply end, infrastructure investment at the demand end is strengthening, automobile production and sales are recovering or driving demand for steel and special steel, so steel prices may fluctuate and maintain the rating of increasing Holdings; 2) electricity demand continues to recover, while water and electricity demand may decline and import year on year The coal policy is stricter, the supply and demand of power coal is improved, and the inventory of ports and power plants is lower than that of last year. We are not pessimistic about the price of power coal; the main coke production areas are subject to frequent capacity reduction and production restriction, and the price of coke is rising, maintaining a neutral rating. At the individual level, it is suggested to choose to benefit from the industry boom recovery leader, Baosteel, Shaanxi coal industry, China Shenhua, etc.