On November 16, 2021, the intraday price of iron ore futures was 540 yuan/ton, a drop of more than 60% compared with 1,358 yuan/ton in May this year. In the first and second half of the year, iron ore prices showed a basic pattern of boom and cliff fall, and the decline of iron ore has continued.
For the future of iron ore, China Metallurgical Mining Association secretary General Jiang Shengcai believes that the current macro and industry situation does not support high ore prices and high steel prices.
Jiang Shengcai analysis, macro view, the current U.S. inflation expectations, is expected to gradually withdraw from the fed by the end of easing, reduce debt, put an end to the liquidity, in order to prevent risk of bubbles, our country will be tightening ahead of schedule, the first half of the year has begun to gradually reduce the liquidity, the M2 growth rate from 10.9% to 8.3% in September, Social finance dropped from 13.7 percent to 10.0 percent at the end of September. Under the general trend of liquidity tightening, real estate investment fell, infrastructure investment increased, and manufacturing investment improved slightly. Macro now level does not support high ore prices, high steel prices.
Industry trends, first, crude steel capacity, output "double limit" is the new requirements of the new stage of development, is to cope with carbon peak, carbon neutrality, the realization of green and low-carbon development of the important path, is also an important measure to ease the pressure on resources; Second, the state adjusted the import and export policy of steel, encourage the export of high additional products, the import of primary steel products, limit the export of low-end products, the policy orientation is obvious; The third is to promote the import facilitation of recycled iron and steel raw materials, effectively increase the supply channels of iron elements, and improve the proportion of eAF steel. The fourth is to promote the promotion and application of high-strength timber saving steel in the upstream and downstream of the iron and steel industry, and the use of steel reduction can be scheduled.
In terms of iron ore supply at home and abroad, the global iron ore output will continue to grow and reach more than 2.6 billion tons in 2025. At the same time, the domestic has begun to strengthen the development of iron ore, domestic iron ore output will maintain stable growth, iron concentrate output will reach 350 million tons in 2025, according to the forecast of CISA, this data may reach 370 million tons at that time, the future increment of domestic mines can be expected; Third, we will steadily promote global mining investment cooperation. It is estimated that overseas iron ore will account for more than 20% in 2025. Finally, the utilization of scrap steel resources will be improved. In 2025, the supply of scrap steel resources will reach 320 million tons, and the proportion of scrap steel supply will reach 30%.
Kang predicts that domestic iron ore prices will fluctuate between $70 and $100 from 2022 to 2025.
As for the boom and slump of iron ore this year, Jiang Shengcai said, it has caused great damage to the mining industry, resulting in setbacks in production, shrinking investment, shrinking industry, loss of a large number of enterprises, closure, withdrawal, market players, industrial investment decline.
He reminded China's mines that they must be alert to dangers in times of peace, accelerate efforts to strengthen their weak spots, make innovations in management, strengthen their foundation, and practice their internal skills. They must reduce costs and improve efficiency, reduce leverage and guard against risks, stabilize the market, promote development and enhance their ability to withstand risks.
