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2022
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02
Iron ore traders are just one link in the steel chain
author:
Since early March, China's iron ore port stocks have topped 130 million tons. So who bought 130 million tons of mine? Make iron ore port deposit appear so big growth.
According to statistics, among 130 million tons of iron ore, about 61% of iron ore or rights belong to traders; Generally we call it trade ore, which stands for iron ore that can be resold.
The remaining 39% belong to non-trade mines, mainly owned by steel mills; Need to point out is, in this part inventory, also have the possibility that takes out resell.
After entering the beginning of March, the port trade mine inventory scale reached nearly 86 million tons, which accounted for 66% of the port inventory.
At this time, traders began to consciously control the growth of inventory scale, and the scale of trade inventory basically kept at a stable level throughout march.
We have reason to think that as we enter march, the high port inventory makes traders start to realize the existence of crisis and start to consciously control the purchase pace.
1. The Golden Decade from 2002 to 2012
2003-2013 Spot Iron ore Price (US $/ ton)
1. The soil where traders grow like crazy
From 2002 to 2012 was the golden decade of rapid development of Iron ore in China. With the crazy rise of iron ore price, a large wave of iron ore traders came into being.
However, since the end of 2003, baosteel group as the Chinese steel industry's negotiator in iron ore negotiations, the outside world and the industry once labeled iron ore traders as "inverted".
Spurred on by China's booming steel industry and the "dual track" system of imported iron ore, the ranks of iron ore speculators are getting stronger.
The double-track iron ore price system means that domestic iron and steel enterprises purchase iron ore from foreign iron ore enterprises in two pricing modes:
(1) long-term agreement price (long-term agreement price), some qualified enterprises unique.
(2) spot price, the price is higher than the long agreement price, does not have qualifications and small enterprises to use.
The existence of spot price, a pricing mechanism, provided soil for the survival of iron ore traders, so in the golden decade, traders desperately through various channels to get a few shipments of iron ore, shipped to China and resold, and made a lot of money.
2. "Hosts" for traders
Small and medium-sized iron ore traders have traditionally been dependent on the big miners and domestic steel mills.
If the traders have steel mills, especially state-owned steel mills, it is easier to sign long contracts with mines indirectly.
An expert at cISA describes the traders' involvement with steel mills as "parasitic" : "Their capital is essentially diplomatic capital and relationship cost".
3. "Gambler" traders
That two years, to avoid trader to dump mine, Chinese authority is tighter with each passing day to iron ore import management, financial expenditure goods trades detail to want examine and verify.
Iron ore traders' strategy is to press the order and pressure the goods, "the ore imported from one year is pressed at the port for one year and then given to the customer next year, and the price is settled according to the next year." This means that the inverters almost become gamblers.
If the price of iron ore rises in the second year, it can make a lot of money; If it falls, it will destroy the family business. And in the gold decade iron ore rally such as rainbow, traders can be said to be happy from ear to ear.
However, no one can predict where the prospects of the quasi market lie, traders did not expect the industry adjustment, this flood of price, let the entire iron ore trade industry on ice.
In 2014, the Platts index fell to 83.75 on Sept. 3, its lowest level in recent years; Low profit steel enterprises, cautious procurement of raw materials, tightening of banking loans, the real industry winter has really come.
Two, winter comes
After the breakneck growth of the last decade, the commodity boom is over. The bear market in iron ore has cost many traders their jobs and dragged down the ports that take them ashore. Many traders bluntly, the volatility of iron ore prices, so that trade risks increased sharply.
Half of the traders who survived during the "winter" were doing well, but if they did, they were just scraping by and might close one day.
1. Iron ore prices slump
Iron ore traders are just one link in the steel chain. For these traders, profits of 10 or 8 yuan per tonne of iron ore in 2014 are no longer comparable to tens of dollars per tonne before 2009.
By 2015, profits were so thin that survival became a priority. A dollar a ton is enough, or lose it.
The drop in profits is rooted in the sharp fall in iron ore prices. The Platts 62% iron ore index, which was trading at $130 a tonne in January 2014, briefly fell below the $50 a tonne mark in early April, a drop of more than 60% in 15 months.
Medium-sized traders can barely manage to make some orders by relying on connections, while small traders can only wait and see or withdraw, and traders are faced with the embarrassing situation of losing money on whoever sells.
2. Port grabs "rice bowl"
On top of the fundamental impact of falling iron ore prices, traders are also being squeezed by direct cooperation between ports and mines.
On July 2, 2015, the Ministry of Transport and the National Development and Reform Commission jointly issued a notice allowing the entry of 400,000-ton ships. On July 4, the 400,000-ton yuanzhuohai ship unloaded 351,000 tons of Brazilian iron ore at Qingdao port.
The decline of ore prices is squeezing the living space of trading companies, and the direct docking between international mines and users will be the trend, and the status of port "supermarket" will become more and more important.
3. Financing becomes difficult
The relationship between traders and banks is like a cat chasing mice, but it is difficult to tell who is the cat and who is the mouse. Today's banks are busy collecting loans.
In the view of a banker, the bank also has a reason, to prevent bad loans, the most direct way is to withdraw loans. But for traders who rely on banks for financing, it is difficult to refinance the loans once they are repaid.
For example, a trader borrowed 700 million yuan with monthly interest of more than 6 million yuan. Now he can't even earn 600,000 yuan. How can he pay back the cost even if he can't pay back the interest? What about the banks?
So in 2014-2016 is the iron ore traders difficult for three years, during this period of small and medium-sized traders in succession fall in winter, but in early 2017, iron ore prices to return to the $90 mark, gave traders to the survival of a respite, although the price presents downward trend, but still gave traders a lot of confidence!
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