Industry insiders have recently revealed that Chinese steel companies generally object to the idea that BHP Billiton, one of the three major iron ore suppliers, intends to push the current quarterly pricing model to monthly pricing. And with the change in supply and demand, Chinese steel companies have already said that they are "no" about monthly pricing.
Recently, steel prices have continued to rebound. As steel prices have gradually recovered, iron ore prices have re-entered the rising channel. Since the low point of July 2, iron ore prices have started to rise, and this round of rebound has exceeded 15%. With the spot price of iron ore rising, the three major cities took the opportunity to implement the new pricing mechanism again.
In fact, the iron ore agreement pricing is getting closer to the spot price, and the impact on the market is not great, but the key point is that this will increase the speculation space of iron ore in the market, and steel companies will face more risks.
Data show that on August 12, 63.5% of the Indian powder ore CFR price (FOB price) in the spot market rose to 155 US dollars to 157 US dollars per ton, which has exceeded market rumors that iron ore suppliers such as Rio Tinto and Japan and South Korea Steel companies reached a pricing agreement of $147 per ton in the third quarter. The recovery of domestic steel prices in the past month is the “reason†for the price increase of spot iron ore. BHP Billiton took the opportunity to submit monthly pricing requirements to some steel mills.
Industry analysts believe that with the development of iron ore pricing mechanism to the spot price, the fluctuation of raw material costs has greatly increased, bringing new challenges to the cost control of steel production and operation.
Luo Bingsheng, executive secretary of China Steel Association, pointed out that iron ore suppliers have changed their pricing mechanism for many years and forced the implementation of index pricing model, which has been widely opposed by steel companies. At present, iron ore prices are subject to artificial speculation, and mining companies are pursuing short-term profits. This practice undermines the relationship between mining companies and steel companies and exacerbates the turmoil in the iron ore market.
Now the entire iron ore market, whether the demand side or the supplier, is trying to find a pricing reference. So far, a pricing model that is highly recognized by both parties, especially the global steel industry, has not yet been reached. In the downturn of the steel industry, short-term contracts also have a greater negative impact on the three giants, rather than just the instability of raw materials supply to steel companies.
Lange Steel Network analyst Li Wei believes that the elasticity of iron ore prices has always been an indisputable fact. But in China's iron ore market, the bigger problem is speculation. In the recent iron ore price increase, traders are behind the scenes. The speculative price hikes that have been promoted by speculation have attracted more traders to join the hype. This year, the long-term agreement price method has become quarterly pricing, and Chinese steel companies have to face the market risk brought by fluctuations.
However, China Steel Association believes that with the recent reversal of iron ore supply and demand, to some extent, it means that in the future, Chinese steel companies will gain more say in iron ore negotiations.
China Steel Association disclosed that the global iron ore supply and demand relationship is undergoing major changes. In the first half of the year, China's iron ore imports reached 309 million tons, an increase of 4.06%. Compared with the first half of last year, the growth rate dropped sharply. Especially since the second quarter of this year, China's imported iron ore has declined for three consecutive months, falling by 2.94% in April, falling by 2.92% in May and falling by 14.72% in June. At the same time, the total amount of domestic iron ore increased significantly, and in the second quarter it increased by 37.61% compared with the first quarter.
For monthly pricing, Chinese steel companies have already said "no".
Recently, steel prices have continued to rebound. As steel prices have gradually recovered, iron ore prices have re-entered the rising channel. Since the low point of July 2, iron ore prices have started to rise, and this round of rebound has exceeded 15%. With the spot price of iron ore rising, the three major cities took the opportunity to implement the new pricing mechanism again.
In fact, the iron ore agreement pricing is getting closer to the spot price, and the impact on the market is not great, but the key point is that this will increase the speculation space of iron ore in the market, and steel companies will face more risks.
Data show that on August 12, 63.5% of the Indian powder ore CFR price (FOB price) in the spot market rose to 155 US dollars to 157 US dollars per ton, which has exceeded market rumors that iron ore suppliers such as Rio Tinto and Japan and South Korea Steel companies reached a pricing agreement of $147 per ton in the third quarter. The recovery of domestic steel prices in the past month is the “reason†for the price increase of spot iron ore. BHP Billiton took the opportunity to submit monthly pricing requirements to some steel mills.
Industry analysts believe that with the development of iron ore pricing mechanism to the spot price, the fluctuation of raw material costs has greatly increased, bringing new challenges to the cost control of steel production and operation.
Luo Bingsheng, executive secretary of China Steel Association, pointed out that iron ore suppliers have changed their pricing mechanism for many years and forced the implementation of index pricing model, which has been widely opposed by steel companies. At present, iron ore prices are subject to artificial speculation, and mining companies are pursuing short-term profits. This practice undermines the relationship between mining companies and steel companies and exacerbates the turmoil in the iron ore market.
Now the entire iron ore market, whether the demand side or the supplier, is trying to find a pricing reference. So far, a pricing model that is highly recognized by both parties, especially the global steel industry, has not yet been reached. In the downturn of the steel industry, short-term contracts also have a greater negative impact on the three giants, rather than just the instability of raw materials supply to steel companies.
Lange Steel Network analyst Li Wei believes that the elasticity of iron ore prices has always been an indisputable fact. But in China's iron ore market, the bigger problem is speculation. In the recent iron ore price increase, traders are behind the scenes. The speculative price hikes that have been promoted by speculation have attracted more traders to join the hype. This year, the long-term agreement price method has become quarterly pricing, and Chinese steel companies have to face the market risk brought by fluctuations.
However, China Steel Association believes that with the recent reversal of iron ore supply and demand, to some extent, it means that in the future, Chinese steel companies will gain more say in iron ore negotiations.
China Steel Association disclosed that the global iron ore supply and demand relationship is undergoing major changes. In the first half of the year, China's iron ore imports reached 309 million tons, an increase of 4.06%. Compared with the first half of last year, the growth rate dropped sharply. Especially since the second quarter of this year, China's imported iron ore has declined for three consecutive months, falling by 2.94% in April, falling by 2.92% in May and falling by 14.72% in June. At the same time, the total amount of domestic iron ore increased significantly, and in the second quarter it increased by 37.61% compared with the first quarter.
For monthly pricing, Chinese steel companies have already said "no".
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