October 24, the Chinese iron and steel raw materials held in Qingdao International Symposium on the major domestic steel mills, the world's three major iron ore producers, the Ministry of Commerce and the China Steel Association attended the meeting, participants exchange supply and demand around the iron ore market views. Iron ore prices next year to, I believe that more and more clear downward trend.
From January to September, the National production of 297.46 million tons of pig iron, up 20.83%, iron ore output of 405.82 million tons, up 37.67 percent. Domestic iron ore production growth, has greatly eased the domestic iron ore supply-demand gap, the rapid expansion of the steel industry with raw material guarantee. Quotes from the market perspective, this year, the domestic mining, mineral and other Indian spot ore prices below long-term agreements in Brazil mine, completely reversing 2004,2005 higher than in the spot ore mine in Brazil's pattern of long-term agreement. Reflect the spot market price sensitive market supply and demand, changes in the pattern shows that the situation in short supply of iron ore has become the past. In addition, look at the international commodity markets, crude oil prices fell to sign a declaration of the international commodity market bull market has ended, the China factor is the gradual restoration of exaggerated character, not the market enthusiastically participated in the theme. In this backdrop, if the iron ore producer status by virtue of an oligopoly, demand factors are still firmly grasp tightly and ignored the changes in market supply and demand, insist on iron prices in 2007 is against the law of the marketplace. In general, the buyer began to tilt the balance the negotiations. However, the present and future problems must be aware of.
China's steel mills in 2006 the first official participation in international iron ore price negotiations, the domestic public attention, have eagerly, determined to talk about a "China price." Reality tells us that the bargaining power of Chinese steel mills still weak.
Iron ore negotiations "to buy three of the Quartet to sell" multi-game, either party may have control in accordance with their interests and reach an agreement with the other chips, not because China is the biggest buyer and enjoy the additional benefits. In accordance with the rules negotiations, any of a negotiated agreement is essentially the final outcome of the negotiations, comeback unlikely. That the parties have bargaining power in the negotiations but no pricing power, but the strength of the bargaining power of various different.
Comparative analysis of Japanese and European steel mills, steel products from Europe and Japan can be found in high-end variety, the products a large profit margins, and in many mining projects have equity investments, ability to digest raw material costs than China, and receptive to iron ore producers higher price, when prices rose higher when the acceptable price may be acceptable when put smaller decline. 2005,2006 annual talks by the Japanese Nippon Steel and ThyssenKrupp of Germany first to reach 71.5% and 19% of the increase results fully demonstrated this point. Therefore, how communication and coordination on the European steel mills to avoid this situation would be the challenges facing China's steel mills.
China Iron & Steel Industry and scattered, with the right of the large iron ore imports, small and medium steel mills and traders up to Baiyu Jia, long external and inconsistent actions, together with large increases steel mill sold mine long-term agreements act provided for the iron ore the opportunity to play one. Largest iron ore consumer market can not be tempted in the negotiations or deterrence chips and weakened China's bargaining position. Negotiations next year, if the interests of all parties can not be coordinated, the internal line of defense was broken again is not impossible.
Easing the current supply and demand of iron ore, iron ore negotiations for the creation of favorable conditions. But to be clear that the supply of iron ore next few years is not optimistic, China's steel industry should take precautions.
China in industrialization and urbanization phase, steel consumption will maintain growth, the Chinese iron and steel industry there is much room for development, crude steel output in 2010 is expected to more than 500 million tons. As the domestic iron ore resource endowment is poor, the future dependence on imported ore to continue to rise.
Many studies showed that in 2010 the supply of seaborne iron ore was 938 million tons, an increase of 267 million tons over 2005; the world's seaborne iron ore demand in 2010 945 million tons, more than in 2005 279 million tons, iron ore Stone supply is still in tension. Market supply and demand structure: the three iron ore giants supply 694 million tons, accounting for 74% of market share; China imported 524 million tons of iron ore, accounting for 56% of demand, China's dependence on the mining companies to further improve . Chinese steel mills, the situation is still grim, in oligopolistic markets is also a tight supply situation, market oligopoly by regulating the production, tight supply situation caused by man, as much as possible price increases, forcing the buyer had to accept situation may repeat itself.
The predicted results also warn us: that the iron ore mining capacity expansion hopes on foreign manufacturers invested heavily in developing iron ore resources, the formation of oversupply and finally break the oligopoly structure of the idea is unrealistic. China's steel industry should establish a long-term strategic thinking, while intensifying the efforts to develop domestic mines the same time, more attention should be paid the exploitation of foreign iron ore resources. If the Chinese steel industry to invest heavily in the next few years, iron mining, to master the 1-2 million tons of new supply, will reduce the dependence of the three iron ore giants, get rid of the passive situation of subjection, not break the iron ore stone supply and demand situation, the Chinese iron ore to increase bargaining power, greatly enhance the bargaining power. In view of the Chinese steel industry's international competitiveness and maintain the sustained and healthy development of steel industry is very important.
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