In recent days, iron ore prices continue to rise, all the way red, has exceeded the industry's price expectations, causing steel industry attention.Steel prices are also in flight mode as iron ore surges.In addition, the frequency of environmental protection production limit increased, the production of steel production space has a certain impact.Under the circumstances of booming futures and tight environmental production limits, downstream demand is no longer the primary factor determining the trend of steel prices.Steel prices are more likely to rise than fall in the short term.

Futures surface

The sharp rise in iron ore prices has become a new challenge to the stability of the industrial and supply chains.Some people concerned think that it has broken away from the basic supply and demand relationship, seriously affecting the sustainable development of the steel industry.

The reason for iron ore's recent surge: high demand for iron ore, but unstable supply.On the one hand, China is a major importer of iron ore, mainly from Brazil, Australia, India and other countries.However, as the temperature gradually turns colder, the control situation of foreign epidemic situation becomes more and more unstable. Therefore, it has a certain influence on the export of foreign iron ore.On the other hand, affected by the epidemic, foreign economies have been in a sluggish state. In order to recover the economy as soon as possible, foreign countries started to focus on the industrial sector.Therefore, in addition to selling their own goods to foreign countries, but also for their own use, goods to the supply side will be in short supply.

In addition, do not rule out the issue of excessive speculation stage.It should be emphasized that such problems as overspeculation and imperfect pricing mechanism usually lead to the price deviating significantly from the fundamentals of supply and demand in the spot market, increasing the price risk.

[Iron ore] 7 day general index (all) 62% 147.55, 58% 128.35 were up 2.25;65% 159.05 up 2.15, block premium 0.12 down 0.005

[Iron ore] Foreign ore market Summary: The port PB955-960 up 25, Yang Di 865-890 up 30, card powder 1060-1065 up 20, general refers to the continuation of the strong, the port is now substantially up

Steel market overview today

Driven by the strong futures, today's steel prices show an overall rising trend.Red in winter.But too fast rise will cause the market wait-and-see sentiment, especially in the consumer off season, let the price fly, downstream do not buy, is also very uncomfortable.

Research on theoretical cost of billet

On 8th, the cost of hot metal without tax is 2,780, which is equivalent to about 3,401 for billet with tax, and the ex-factory price of tangshan billet is 3,640, making a profit of about 239 yuan/ton.The cost of molten iron inventory is expected to be about 2624 (excluding tax), which is equivalent to about 3225 tax cost of billet, and the profit is about 415 yuan/ton.

Summary: China has a high demand for iron ore at present, but due to many factors such as unstable supply, the price increase is too large.On the face of it, the situation looks rosy, but in reality it is not.High raw material prices, not only squeeze steel mills profit, but also need downstream traders to pay.That is to say, the price increase of imported iron ore far more than the price increase of steel, will become the primary factor restricting steel enterprises to improve economic efficiency.It has even affected the hard-won economic gains of China's policies to deal with the epidemic.Therefore, iron ore prices in the short term is likely to have a small rise, but then will be reduced.Children preparing for winter storage can wait and see.