The rapid rise of iron ore prices has attracted attention, and the linkage supervision of the spot market has "cooled down"
2022-02-14
Recently, the price of iron ore fluctuated abnormally, which aroused the continuous attention of the regulatory authorities. The national development and Reform Commission has repeatedly voiced its voice to ensure the stable operation of iron ore market prices, and severely punished illegal acts such as fabricating and disseminating price increase information and bid up prices. Liu Xiangdong, deputy director of the Economic Research Department of the China Center for international economic exchanges, told the Securities Daily that the recent changes in iron ore prices were mainly impacted by the expectation of tight supply, including some expressions of market panic. From the situation reflected in all aspects, the supply of Australian iron ore market is affected by the climate, but the overall output remains stable, which will not lead to tight supply due to insufficient shipment volume, and the spot market price of steel has not followed up. From the perspective of the global market, the global iron ore production capacity has not been seriously impacted in all aspects, and the shipments of miners are guaranteed. Regulatory action to combat malicious speculation Iron ore prices have rebounded strongly this year. On February 10, the Platts index of iron ore closed at US $153.75/ton, up 29% from the beginning of the year. In fact, as early as January this year, the market price of iron ore rose sharply, during which several abnormal fluctuations attracted the attention of the regulatory authorities. On January 28, the national development and Reform Commission said that at present, the supply and demand of the iron ore market is generally stable, the domestic inventory is at a high level for many years, the price has risen too fast recently, and there is speculation. It will strengthen supervision and severely crack down on illegal acts such as spreading false information, bid up prices and malicious speculation. On February 9, the national development and Reform Commission and the State Administration of market supervision jointly interviewed relevant iron ore information enterprises. On February 11, the national development and Reform Commission announced that the price department of the national development and Reform Commission and the price supervision and Competition Bureau of the State Administration of market supervision will carry out joint supervision and Research on the iron ore market. Focus on understanding the recent changes in iron ore inventory and the participation of relevant enterprises in iron ore futures and spot trading, and listen to the opinions and suggestions of relevant parties on strengthening the linkage supervision of futures and spot market, and severely cracking down on fabricating and disseminating price increase information, hoarding, bid up prices and malicious speculation. The reporter noted that on the day when the regulatory authorities interviewed the iron ore information enterprise, esteel diangang issued a clarification statement, saying that the information about the possible reduction of shipments from "Atlas" and "Rio Tinto" mines described in its article on January 27 was not authorized or verified by "Atlas" and "Rio Tinto", which was untrue information. On February 11, China Iron and Steel Industry Association issued a document saying that according to the monitoring of China Iron and Steel Industry Association, some mining enterprises recently violated business ethics and released and hyped false information, which seriously disturbed the fair order of the market and damaged the legitimate interests of market subjects. The iron and Steel Association condemned this. Any behavior and participants that ignore the market law and illegally interfere with the normal operation of the market should be corrected and pay a price for it. "On the whole, the transportation obstruction caused by the epidemic in the early stage affects the market expectations. Therefore, some manufacturers may be overly worried about iron ore prices in order to convey relevant anxiety." Liu Xiangdong said that the recent abnormal changes in iron ore prices have aroused the great attention of the regulatory authorities. At present, supervision has achieved good results, and iron ore prices have fallen sharply. "Ensuring supply and price stability is a necessary condition for steady growth. As the upstream raw material of the whole iron and steel, infrastructure and real estate industry chain, the rapid rise of iron ore price will squeeze the profits of the downstream industry. Because the supply of iron ore is monopolized by the oligopoly of overseas giants, the downstream demand smelting industry has many participants and the market is completely competitive, the iron ore price is easy to rise but difficult to fall." Mingming, chief economist of CITIC Securities, told the Securities Daily that the national development and Reform Commission and industry associations require to improve the transparency of industry information and maintain the stability of market prices according to law, which will help ensure the smooth operation of the economy. The supply and demand of iron ore is basically stable In addition to speculation, is the sharp rise in iron ore prices in the short term due to insufficient market supply? Liu Xiangdong believes that from the supply and demand situation, the supply and demand of iron ore has basically remained stable. In particular, China's iron ore demand has not increased significantly, and the supply and demand pattern has not changed significantly. Although there will be logistics obstruction in the supply, the situation of increased supply does not change in the short term, and the supply and demand in the market is basically in a balanced state. According to customs statistics, in 2021, China imported 1.124 billion tons of iron ore and its concentrate, a decrease of 3.9% over the previous year; According to the data of the National Bureau of statistics, the original mineral volume of iron ore in China in 2021 was 98.0528 million tons, a year-on-year increase of 9.4%, and the output continued to grow. From the supply side, the current loose iron ore supply situation remains. Mysteel data show that the total port inventory has remained at a high level of 150 million tons since November 12 last year. As of February 11 this year, the total imported iron ore inventory of 45 ports in China was about 159 million tons, an increase of 1.6364 million tons month on month. Mingming believes that since it takes time from "credit easing" to the recovery of real estate and infrastructure investment, and then to the improvement of actual steel consumption, there may be a time lag in the return of demand in peak season, coupled with the stable price fluctuation of regulatory policies, from the situation of ensuring supply and price stability last year, the policy effect is expected to gradually appear, and the market price is expected to drive stable. The possible direction of follow-up policy is to strengthen the supervision of traders and information institutions on the one hand, and expand the supply of electric furnace steel on the other hand. In the medium and long term, it is still necessary to improve the bargaining power of China's iron and steel smelting industry to overseas iron ore supply enterprises. (Xinhua News Agency)
Edit：He Chuanning Responsible editor：Su Suiyue
Source：Securities Daily
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