After maintaining a relatively strong market in the past two months, the iron ore futures price has ushered in a turning point recently. On January 6 and 9, 2023, 2305, the main contract of iron ore futures price, saw a continuous correction.
Many analysts told the Securities Daily that the rise of iron ore futures price was postponed, indicating that the medium-term rise had ended. According to the past trend, the price below 850 yuan/ton became the acceptable cost price for the market, while there might be a "water mark" above 850 yuan/ton. It is expected that the iron ore futures price will fluctuate widely this year or be the main tone.
Industry insiders said that from the perspective of futures trend in recent years, iron ore futures kept stable operation, and the futures price and increase were lower than those of overseas indexes and derivatives, providing the market with a tool to reflect domestic macro-regulatory requirements and reasonably find forward prices. On the whole, the "stabilizer" function played a significant role. At the same time, with the promotion of the "cornerstone plan" in the steel industry, the situation of tight iron ore supply and resources constrained by foreign countries may change in the future.
The increase of internal market is lower than that of external market
From November 3 to December 30, 2022, iron ore prices experienced a wave of rise. During the period, the settlement price of the main contract of iron ore futures rose from 613 yuan/ton to 858 yuan/ton, an increase of nearly 40%. During the same period, the price of the Proctor index rose by 47.6% to 117.35 dollars/ton (converted into the price of the standard futures product is 951 yuan/ton, the same below); The main iron ore swap contract on the Singapore Stock Exchange rose 49.1% to 117.15 US dollars/ton (950 yuan/ton); Qingdao Port's 61.5% PB powder rose 33.9% to 854 yuan/wet ton (908 yuan/ton). On the whole, the main contract price and increase of the internal iron ore futures are lower than the overseas index and derivative price, and the futures price is also lower than the mainstream spot price of the port, which to some extent plays a role in restraining the rapid rise of the current price.
Li Qi, a researcher of the Zhongyan Futures Investment Consulting Department, told reporters that the main reason for supporting the current round of iron ore spot price rise was the change of macro factors, which led to the consistent improvement of market expectations. "At the beginning of November last year, the market expected the pace of interest rate increase of the Federal Reserve to slow down, and iron ore prices in overseas markets first turned from decline to rise. With the optimistic domestic macroeconomic operation and the continuous release of policies such as superimposed support for real estate, iron ore prices were supported to rise."
On January 6, the National Development and Reform Commission announced that it had recently organized a meeting to analyze and judge the iron ore market and price situation, listen to the opinions of industry experts and some market institutions, and study and strengthen the supervision of iron ore prices in view of the recent rapid rise in iron ore prices.
On January 6, the domestic iron ore futures market quickly responded to the statement of the regulatory authorities. Wenhua financial data showed that the main contract 2305 fell from the highest point of 846 yuan/ton to the lowest point of 819.5 yuan/ton at the end of the day, closing at 826.5 yuan/ton. On January 9, the white price of the main iron ore futures contract fell by 2.49% and closed at 823 yuan/ton. As of 17:00 on January 9, the main iron ore swap contract on the Singapore Stock Exchange fell 0.82%, and the domestic futures market fell more than overseas.
Build high-quality futures market
In 2023, relevant market institutions believe that iron ore supply and demand will enter a long-term loose pattern. From the supply side, it is expected that the world will increase by about 40 million tons, of which the main production areas of Australia and Brazil will increase by about 20 million tons, the non-mainstream production areas will increase by about 17 million tons, and the domestic mines will increase by 3 million tons; From the perspective of demand, the domestic crude steel output in 2023 is not expected to exceed that in 2022, but in the second quarter of 2023, the steel plant may resume production in stages after the end of the heating period; Looking at the whole year of 2023, it is expected that the amount of molten iron will be reduced by about 10 million tons, and the demand for overseas iron ore is also expected to decline.
It is worth mentioning that the domestic supply of scrap steel is also expected to increase, forming a partial substitution for iron ore. At the same time, Dashang will accelerate the pre-listing work of renewable steel raw material futures, and will add new derivative hedging tools to the steel industry chain.
"In the short term, the market optimism still dominates, and the policies to promote consumption and stabilize the economy continue to be introduced, while the steel factory inventory is still at a low level, and there is support below; but considering that the current season is in a seasonal off-season, the terminal consumption is weak, and the upward space of the futures price is suppressed, it is expected that under the relevant regulatory statements, the subsequent futures price may be dominated by high consolidation." Yang Yanlong, a black researcher of Jinxin Futures, believes that, Risks are more concentrated in trading enterprises and steel mills. It is suggested that during the high price consolidation process, we should maintain on-demand procurement and maintain the standing stock according to the actual production situation.
The reporter learned from the interview that in recent years, the domestic steel industry has actively explored to ensure the safety of China's important mineral resources and the supply and price stability of the steel industry. The listing of iron ore futures has been running smoothly in the past ten years, and has gradually played a certain role in the price, which has improved the containment effect of domestic port spot on the Proctor index. The port inventory and the Proctor index have changed from weak negative correlation to strong correlation. International mines have also begun to participate in and actively layout the port spot sales.
In the long run, to fundamentally change the situation of iron ore resources under the control of others, the domestic spot market needs to work together. On the one hand, under the framework of the "Cornerstone Plan", actively layout and support domestic ore mining, promote the more efficient recycling of recycled iron and steel raw materials, enrich the supply channels of iron resources, and solve the "neck" problem of iron and steel raw materials.
On the other hand, we should build a high-quality futures market, improve the representativeness and influence of futures prices, give full play to the function of futures price signals, and use the port spot market and the domestic futures market to form a market in which futures and futures are mutually coordinated and complement each other, so as to enhance China's influence in the international iron ore trade.
