The recent "Who Moved My Cheese" steel industry in-depth report put forward the view of "overweight iron ore". At the same time, investors are skeptical and wonder why the price of ore will rise significantly. For this reason, we will again report on the ore in depth report “Ponder of the Stones†PPT version in the International Symposium on Iron and Steel Materials held in Shanghai on July 13th. It is published in a text format and hopes to help investors. We once again emphasize: Overweight ore! Ore Four Tigers: East “Golden†South “Create†West “Ning†North “Steelâ€.
The main point: The ore market is a commodity that is priced globally. Since it accounts for about 50% of the production cost of steel companies, the annual price changes are related to the survival of the steel industry. We believe that iron ore is not a rare element. There are abundant reserves in the earth's crust and the supply surface can be expanded indefinitely. Under certain circumstances, the marginal mining cost actually determines the level of ore price; the three major steps of mine cost: from global iron ore In the stone market, the cost of mining from low to high can be divided into three levels:
1. The original world-class mines, represented by the three major mining giants, not only enjoy a very low cost of mining and selection, but also improve the basic infrastructure to keep it at the bottom of the cost line.
2. Emerging overseas mines have advantages in the cost of mining and selection, but amortization of a series of external costs such as logistics and environmental protection has pushed up the overall costs. This part of the mine is located in the mid-range region of global mining costs;
3. High-sensitivity domestic mines, due to poor extraction conditions, low ore grades, and high mineral processing costs, these mines are at the top of the cost curve and are extremely sensitive to ore prices. The marginal cost of these mines determines iron Ore price changes.
Domestic mine supply quantity: On the global iron ore market, ore suppliers are subject to long orders and tariffs, giving priority to meeting domestic and long-term order production needs. Therefore, by counting the production capacity of Class I and Class II mines and removing the external market demand, we determine the domestic iron ore supply gap, which requires high-cost mines to make up. The specific figures are as follows: International iron ore supply: Through the total production capacity of ore production, we estimate that the global trade iron ore supply in 2010 was about 1.649 billion tons, an increase of 5.7% over the same period last year.
In addition to the demand for iron ore outside China: In 2010, the demand for iron ore from China will reach 877 million tons, a year-on-year increase of around 27%. The sharp increase in demand is mainly due to the low operating rate of iron and steel enterprises in various regions in 2009. The reason for the low.
Conclusion: In 2010, China's available iron ore was about 750 million tons, and the gap created was about 340 million tons.
Medium and long-term price judgment: We process the domestic mining cost data and obtain the cost curve. We believe that the iron ore price center area will be 920 yuan/ton this year, and the price center in 2011 will be 1400 yuan/ton. In 2012, due to the release of new mine capacity overseas, the mine price is expected to fall back to 1,000 yuan/ton. What we need to explain is that the above price inference is only a judgment of the change in the medium and long-term average price, and it does not rule out large fluctuations in prices caused by fluctuations in the inventory cycle in the short term; investment strategy: domestic Chong Hing Properties (according to the final production capacity), Jinling Mining, Xining Special Steel ranks first in the domestic market with each refined powder content of 4 kg, 3 kg and 3 kg respectively. The above companies will obtain higher returns in the mid- to long-term ore price increase and give a “buy†rating. It is advisable for investors to match ores with ore and four tigers with ore: East “Goldâ€, South “Chuangâ€, West “Ning†and North “Steelâ€.