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Vale mine disaster continues to ferment How to go after iron ore futures?
WeChat public number: brokerage China
In late January, a tailings dam in Brazil, the world's largest iron ore producer, Vale, collapsed, causing soaring iron ore prices.
During the Spring Festival, this sudden incident continued to ferment, and the shortage of supply shortages increased, causing Singapore's iron ore swap prices to continue to rise, and the increase during the holiday period was nearly 8%. The domestic futures market will reopen tomorrow, and the black circle of friends has already been bullish.
Iron ore prices continue to rise
Because of the long breaks, the external disk fluctuations during the Spring Festival holiday have always touched people's hearts. Affected by the mine disaster in the Vale, the price of iron ore outside has recently increased notably, and the price of iron ore swap contracts has continued to rise during the long holiday.
The data shows that after the short-term correction of the main iron ore swap in Singapore on February 4, the February 4th - February 8th rose for four consecutive trading days, and the cumulative increase during the Spring Festival holiday period reached 7.9%. The latest closing price regained the $90 mark, setting a new high in recent years. The 62% Platinum Iron Ore Index, which reflects the spot price of iron ore, rose nearly $4 on February 7, and also broke through $90.
Vale mine disaster continues to ferment
As we all know, the fuse of the current round of iron ore prices is the mine disaster that occurred in the Vale last month.
On January 25, 2019, Vale, the world's largest iron ore producer, was in a dam-breaking accident at Feijo, a tailings dam in Brumadinho, Minas Gerais, southeastern Brazil. The mining waste mud has poured down, causing the community and nearby villages to be flooded. So far, more than 100 people have died.
The incident caused concern about the international iron ore supply and the relevant market responded quickly. The price of iron ore futures on the Dalian Commodity Futures Exchange rose sharply. On the last trading day before the long holiday, the main contract rose by 5.6% in a single day.
At the same time, Vale's share price plummeted. On January 25, New York time, the company's share price fell more than 8%; on January 28, the single-day drop even exceeded 18%.
On the Spring Festival holiday, the Danshui mine disaster continued to fertilize. On February 4th, the Brazilian court demanded that Vale be suspended in the Brucutu mine in Minas Gerais.
The Brucutu mine is the largest mining area in the state. The annual production capacity of iron ore is about 30 million tons. The new production reduction is not included in the previously planned 40 million tons reduction measures. At the same time, Brazilian regulators have recently revoked the business license for the Brucutu mine, which is vital to Vale, adding to the obstacles to normal operations after the major dam breach in the world's largest iron ore producer.
On February 5th, Vale officially announced that it will suspend the production of the concentrator of the Vargem Grande project to speed up the shutdown of the tailings dam. The project will produce about 13 million tons of iron ore per year, which was announced by the company. Part of the 40 million tons production plan. On February 6, Vale announced force majeure on the iron ore sales contract, triggering further increases in international iron ore prices.
It is worth noting that on November 5, 2015, Samarco, a joint venture between Vale and BHP Billiton, located in the Fundo iron ore tailings dam near Mariana, the state, also suffered a dam break, killing 19 people. Some villages and towns are flooded.
The large increase in long-term external iron ore will undoubtedly affect the Dalian iron ore futures that will open tomorrow. The black spot and futures investors who are concerned by the Chinese reporters of the brokerages are almost all bullish on the future. Some aggressive investors even predict the opening. Daily limit.
The rise in iron ore prices hits the Chinese steel industry
Iron ore is an important raw material for steel production. China is a global steel country with an iron ore dependence of up to 80%. In 2018, domestic iron ore imports exceeded 1 billion tons. The price of iron ore directly affects the cost of steelmaking, and its price increase will have a greater impact on the Chinese steel industry.
"The average price of imported ore in 2018 is about 70.96 US dollars / ton. If the price of iron ore is really raised to 93 US dollars / ton according to the price of the latest Singapore swap transaction, then in 2019, when the import volume is flat, China The steel industry will pay more than 20 billion US dollars for this cost, which is equivalent to about 140 billion yuan. What does this data mean? It means 7 times the profit of Baowu Steel 2018 and 18 times that of Angang 2018. The full-year profit will be paid out," said Sheng Zhicheng, a senior steel industry researcher.
Shen WanhongyuanIt is believed that the dam failure in the Vale will affect the annual output of 40 million tons. According to Mysteel's forecast, global iron ore supply will increase by 39.3 million tons in 2019, of which Brazil will increase by 18.9 million tons, mainly due to the increase in production of the S11D project of the Northern System of Vale and the resumption of production by Minas Rio. Australia has increased by 2.9 million tons. China has an increase of 4 million tons.
The Vale CEO announced that it will temporarily shut down production facilities in the relevant tailings dam area, including all five mines in the Paraopeba complex in Córrego do Feijo, four mines in the Vargem Grande complex, and two pellet plants. It is expected to affect the annual output of 40 million tons of iron ore.
It is understood that the accident destroyed the entrance of the Paraopeba mining area to the north-south railway line, and the number of people killed in the accident is far more than the Samarco dam break in 2015 (the Samarco mine has not resumed production so far), so it is possible to judge the shutdown time. Longer. Considering that the North China S11D project is expected to reach 70-80 million tons this year, with a median of 75 million tons as a hypothesis, Vale's production in 2019 will drop to 375 million tons, down about 15 million tons, global iron ore. Supply growth has fallen to approximately 14.3 million tons.
Due to the expansion of the iron ore supply gap, the Division raised the average price of the 62% iron ore index of Platts to US$75/ton. At the same time, the weighted ton gross profit of listed companies in the industry will be lowered to 525 yuan/ton, maintaining the industry's “neutral” rating. Since the price of iron ore is raised from US$65/ton to US$75/ton, the cost of molten iron smelting will increase by about 125 yuan/ton according to the exchange rate of RMB 6.75. Therefore, Shenwan Hongyuan also lowered the weight of steel-denominated steel for listed steel companies in 2019. To 525 yuan / ton (formerly 650 yuan / ton), the impact on the profitability of listed companies, maintain the industry's "neutral" rating.
In addition, rising iron ore prices will have a significant impact on the prices of commodities related to the steel industry.
"Comparatively, the news related to the steel industry during the holiday season is relatively dull. Except for the further refinement of the non-heating season in Tangshan, there are basically no other prices that have a direct impact on the disk. At present, the overall focus of black goods is still concentrated in iron ore and In terms of coking coal, in the case of iron ore and coking coal prices, the probability of a large increase in black goods after the holiday is still very large. However, for Chengcai, it is inevitable that the stocks will rise sharply after the holiday. Once the demand has not started, once the price rises sharply, it means that such a large amount of inventory will have a huge profit margin. Once the demand cannot be released quickly, the profit-taking of this part of the resources will exert significant pressure on the market. After the holiday, the price performance of the whole finished product will be less than that of the raw material. The price increase of the raw material will drive the price of the finished product, but the sustainability may not be too strong. It is necessary to further observe the release of demand and the change of inventory. I think the probability of the first rise and then fall is still quite big." Everbright Research Director, Institute of black goods Qiu Yuecheng said.
Editor in charge: Dou Xiaowei
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