Port iron ore stocks hit a record high
Recently, it was learned that the BDI index has fallen more than 20% since the beginning of this year due to the sluggish demand for large sea-going vessels transported by iron ore. According to the latest data, as of July 25, the BDI index closed at 1317 points, falling for 12 consecutive days, down 8.4% from 1437 points on July 11.
Known as the “barometer”, the Baltic Dry Index (BDI) has continuously released the “iron ore market downturn” signal, which is a huge contrast with the domestic price of the mine.
As iron ore turns to flexible pricing such as quarterly and monthly, the control of iron ore is even more alarming. Even in the case of a decline in sea freight rates and a sluggish shipping market, it is still possible to “turn the tide” on the price of iron ore that should have fallen by various means.
The reporter learned that the iron ore stocks in China's major ports have reached record highs, and high iron ore stocks have already inhibited China's iron ore import demand. Because of this, the freight rate of the Capesize market fell again. Last Thursday, the freight rates of Western Australia and Brazil Tubarão to Qingdao MTR iron ore routes were US$8.03/ton and US$20.13/ton, respectively, down 4.86% and 3.22% from the end of the previous period.
The current situation of BDI's continuous decline undoubtedly means that the global iron ore market as a whole is in a downturn. However, it is worth noting that domestic iron ore prices have risen “contrarian” in such an environment. According to the latest data, after several weeks of price increases, the current market price is at a high level. On the 26th, the mainstream price of the 63.5-print outer disk is around 182-184 US dollars per dry ton.
“In the case of a sluggish global iron ore market, domestic iron ore prices have remained at a high level. 'One low and one high' just proves the monopoly of the three major mines in iron ore and its control over prices.” Analyst Xu Guangjian told reporters.
A trader admits that foreign miners, including the three major mines, have begun to tighten supply and use frequent ore tenders to “crowd up” the price of the mine. At present, the mainstream high-grade resources dominated by the three major mines in the market are very tight, and the mines offer high prices and relatively firm prices.
"At present, the demand for iron ore is in the off-season, coupled with the tightening of credit policies and the pressure on raw material costs, steel companies are generally facing financial constraints, and the purchase of raw materials such as iron ore is also suppressed. More is to choose and wait." A deputy general manager of a large steel mill in the region told reporters that the current steel mills maintain a low inventory of about 20 days, with a small amount of replenishment stocks.
For the later trend, Bao Zhangjing, chief researcher of China Shipbuilding Industry Comprehensive Technology and Economic Research Institute, told reporters that there are seasonal factors in the BDI losing streak, but mainly the imbalance between supply and demand, and the amount of new ships on the market is too large. Since the beginning of the year, the dry bulk market has been bad. The current supply and demand relationship cannot support the BDI price to go up.
In the medium term, BDI will still be low, but it does not rule out a short-term rebound. Now the order volume of new ships is still relatively large, and hundreds of millions of dry bulk cargoes will be put into the market in the next few years.
The data show that the iron ore price and the BDI index are basically in the same trend of “same rise and fall”. In the period of the surge in iron ore imports in the first half of 2008, not only did the iron ore import price push to a historical high of $200/ton, but the BDI index also broke through the high of 11,000 points.
Good for the second half of the year, steel prices fluctuated