Driven by the recent global economic recovery expectations, the overall black varieties have risen sharply in the past month, among which the main iron ore contracts have increased by more than 20% compared with the October low.
On December 3, DCE issued a notice to implement the trading limit system for 2105 contracts of iron ore futures.
According to the notice, starting from December 7, 2020 (i.e. at the sub section of night trading on December 4, 2020), the single day open position of non futures company members or customers on iron ore futures 2105 contract shall not exceed 10000 hands. The single day opening volume refers to the sum of the number of open positions purchased and sold on all futures contracts of iron ore varieties by non futures company members or customers on the same day. At the same time, the number of hedging transactions and market making transactions is not limited, and the account with actual control relationship is managed as one account. In addition, the exchange may adjust the trading limit according to market conditions.
Ge Maomao, deputy manager of charge department of steelhouse website, analyzed the first half of 2020, domestic port iron ore inventory fell sharply. From late June, iron ore port inventory gradually rose. As of the end of October, iron ore inventory of 46 major ports in China was about 130 million tons, an increase of 21.2 million tons compared with the lowest value in mid June, with an increase of 19.7% However, the fine ore inventory is relatively low, only 79.8 million tons, which is 18.25 million tons lower than the beginning of this year. There are still some problems in the inventory structure.
In terms of production capacity, according to the National Bureau of statistics, from January to September this year, Chinas crude steel output was 781.59 million tons, an increase of 4.5%; pig iron output was 665.48 million tons, a year-on-year increase of 3.8%; steel output was 964.24 million tons, a year-on-year increase of 5.6%. The China Iron and Steel Industry Association said in October that Chinas crude steel production this year is expected to exceed 1 billion tons, a year-on-year increase of 3% to 5%. In the whole year of 2019, Chinas crude steel production capacity will be 996 million tons, a year-on-year increase of 8.3%.
In terms of import, Li Xinchuang, vice president of China Iron and Steel Industry Association, said at the 2021 steel industry chain development summit forum that while Chinas steel industry accounts for half of the worlds iron and steel industry, its main grain iron ore is a long-term problem. Iron ore is one of the most important raw materials for blast furnace ironmaking. In recent years, some steel enterprises have laid out coastal areas. In addition to environmental protection considerations, the coastal port logistics advantage required for importing iron ore is also a major factor considered by these enterprises. In 2015, Chinas foreign dependence on iron ore broke through 80% for the first time, and then remained high. According to the General Administration of customs, in the first 10 months of this year, China imported 975 million tons of iron ore, an increase of 11.2% year-on-year. Iron ore is mainly imported from Brazil and Australia.
Ge Maomao predicted that in 2020, the iron ore market as a whole will present a trend of prosperous supply and demand, while in 2021, the margin of supply and demand will become relatively loose, and the price center of iron ore market is expected to move down in 2021.
Increasing demand for industrial risk aversion
The fluctuation of iron ore price has a great impact on the profits of iron and steel enterprises.
The novel coronavirus pneumonia epidemic is hit by demand and the cost of rising can not be passed on to customers, so the profitability of the steel manufacturing enterprises in the Asia Pacific region will be hit hard in the year to March 2021, Moodie Investors Service Inc said in a new report.
The downturn caused by the epidemic has impacted on the demand of the major steel using industries, unlike the industry downturn caused by the oversupply related to large capacity increases in the past, said Laura acres, managing director of Moodys corporate finance department.
At the same time, with the background of price fluctuation, the demand of iron and steel enterprises to use futures tools to manage risk is strong.
According to the statistics of DCE, in the first 10 months of this year, the position of corporate clients of iron ore futures accounted for 49%, an increase of 4 percentage points over the same period of last year.
However, in terms of delivery, compared with non-ferrous metals, energy and chemical industry and other black series varieties, iron ore has the characteristics of relatively low unit price of goods, futures storage fees and inbound and outbound costs account for a relatively high proportion of the value of goods. Enterprises participating in futures trading and delivery are more sensitive to delivery costs, and hope to further reduce delivery costs.
Specifically, the big business on the iron ore delivery warehouse delivery costs of the maximum price has been reduced. Among them, the maximum price of vehicle delivery fee is reduced from 10 to 15 yuan / ton to 8 yuan / ton, that of train is reduced from 20 to 23 yuan / ton to 8 yuan / ton, and that of ship delivery fee is reduced from 25 to 44 yuan / ton to 12 yuan / ton (excluding port construction and port fees).
Market participants said that after the adjustment of delivery warehouse delivery fee, it is expected to reduce the delivery cost of industrial enterprises by 20% to 73%. Taking the common delivery mode of automobile and train delivery as an example, compared with the standard of 10-15 yuan / ton for automobile delivery and 20-23 yuan / ton for train delivery cost before adjustment, the maximum price limit of 8 yuan / ton after adjustment is significantly reduced compared with that before adjustment, which effectively reduces the delivery cost for iron and steel enterprises, helps to reduce the delivery basis and promote the convergence of the future.
The above market participants also pointed out that the iron ore delivery fee reduction is implemented in the far month contract, which has little impact on the stock market. At present, the long-month basis difference of the main iron ore contracts is more than 150-200 yuan / ton. After the adjustment of the vehicle and train delivery costs, it is estimated that the delivery cost that can be reduced accounts for only 2% to 5% of the long-month basis, which has little impact on investors who refer to the long-term basis for long-month trading. According to the relevant person in charge of DCE, in the future, DCE will study and launch measures to further reduce the delivery cost and the cost of holding warehouse receipts, support more iron and steel enterprises to set up delivery warehouses, service enterprises to deeply participate in iron ore futures pricing and risk management, facilitate enterprises to participate in futures trading and delivery, and improve market industry service ability. Source: Yang Qian, editor in charge of Finance and Economics_ NF4425
The above market participants also pointed out that the iron ore delivery fee reduction is implemented in the far month contract, which has little impact on the stock market. At present, the long-month basis difference of the main iron ore contracts is more than 150-200 yuan / ton. After the adjustment of the vehicle and train delivery costs, it is estimated that the delivery cost that can be reduced accounts for only 2% to 5% of the long-month basis, which has little impact on investors who refer to the long-term basis for long-month trading.