Currently, the world iron ore market in general tend to balance supply and demand, iron ore prices are relatively the highest level there is a certain decline, research institutions have entered the forecast decline in iron ore prices given channel, many industry insiders domestic iron ore prices have been remains high anxiety seems to be put down.
However, I just think that the future risk of China's iron ore resources and support mainly from the price: iron ore prices down is not only a single path, but on the mining giant's business strategy, but also depends on China's iron ore resource supply security strategy is to "mine" and "steel" comprehensive reflection of the game.
Therefore, we not only need to have a clear analysis and rational understanding of the future iron ore prices, but also need to strengthen the security of supply of iron ore resources top design strategy, the steel industry to break the kinds of passive situation radically.
China's future is still a large demand for iron ore
Steel is the most important modern industrial structural materials, iron ore, iron and steel industry is the main raw material. In recent years, China's steel industry since the demand for iron ore than half of the global total, which is contributing about 90% of the increment in the world. China is in the industrialization and urbanization, the middle stage.
The next 10 to 20 years, with the development of progressive industry and promote the reform of the household registration system from east to west, China's industrialization and urbanization in-depth development will continue to maintain large-scale infrastructure construction, urban housing and public facilities, and the resulting The huge demand for raw steel.
Volume of steel per capita terms, far below the level of the United States, Japan and other developed countries, a huge gap also means huge potential for future growth. China's crude steel production in 2013 was about 750 million tons (corresponding finished iron ore demand of about 1.15 billion tons), the annual growth rate in the future are likely to remain at about 2% to 3%. In the case of per capita steel scrap stock volume in the low insufficient resources, iron ore demand will remain at a high level longer period of slow growth.
China's iron ore supply will remain a long-term dependence on imports
Although the total amount of iron ore resource rich country, ranking fourth in the world, but the presence of low grade, poor smelt performance, negative factors such as small-scale mineral deposit, the world's iron ore production costs and much higher compared to the giants, poor competitiveness of China's steel industry can not meet the huge demand for iron ore.
In recent years, China's iron ore imports and rising dependence on foreign imports ore from 112 million tons in 2002, rising to 744 million tons in 2012, the foreign dependency rose from 39.7% to 68.5% of the high.
As of the end of 2012, Chinese enterprises overseas equity shares by the amount of mineral-led development and holding only 60 million tons, the proportion of total imports of iron ore is less than 10%. Comprehensive analysis of the current quality of iron ore resources overseas projects, and in the construction of the proposed project, the cost of mining, rail and port transportation and other factors, the amount of overseas mineral interests will gradually increase in the coming years, it is expected that the proportion of imported ore remains less than 20%.
Should establish more overseas iron ore supply base
Currently, research institutions have given into the forecast iron ore prices down channel, such as the China International Capital Corporation predicted in 2014 for $ 105 / ton, Deutsche Bank predicted in 2014 for $ 110 / ton, Goldman Sachs predicted in 2015 for $ 80 / ton, UBS Securities predicted in 2016 for $ 92 / ton, Morgan Stanley predicted in 2020 for $ 98 / ton.
However, due to the current iron ore pricing mechanism remains to be manipulated factors, I think that the future is not only a single iron ore price trend downward path, but under the new situation, "mine" and comprehensive reflection of the "steel" of the game, depending on Mining giants in the business strategy, but also depends on the supply of iron ore resources protection strategy.
Forced to raise domestic iron ore production capacity will push up the price of iron ore
By strengthening the domestic iron ore resources development and utilization, the introduction of relevant policies to encourage domestic ore supply capacity can be increased to a certain extent, but subject to domestic iron ore resource endowment conditions are poor, higher development cost factors, domestic ore is still far short of demand .
If in the case of the current domestic mineral potential has been able to more fully excavated, forced a substantial increase in domestic iron ore supply capacity will inevitably push a lot worse conditions resource endowments into the mining of iron ore, iron ore mining ecological, environmental, safety, etc. renewed pressure, the marginal cost of a substantial increase in domestic iron ore prices will drastically rise.
In this case, one of China's steel industry due to iron ore prices will face more severe situation; on the other hand, unless the implementation of the national policy of severe iron ore trade barriers, otherwise a lot of the high cost of domestic iron ore production capacity in International iron ore production capacity in front of a low-cost basic vulnerable. In the trend of global economic integration, the final game results will be forced to shut down a large number of high-cost domestic iron ore, iron ore resources have security of supply channels go back to mainly rely on imports.
Foreign mining giant will increase the degree of monopoly
Showed a high degree of long-term overseas iron ore supply monopoly. Four giant Vale, Rio Tinto, BHP Billiton and FMG company, with control of the iron ore is located in the best quality iron ore resources at the bottom of the cost curve, occupy the most favorable market position.
In recent years, the four iron ore production accounts for about 40 percent of global giants, but control about 70 percent of global market share in the iron ore trade, master of the world's iron ore trade pricing right to speak, the net profit rate of over 30%, a very earth squeezed profit margins of domestic steel industry.
According to statistics, in 2013-2019 years, global plans to add a total capacity of about 750 million tons of iron ore, of which four giant proportion over 60%, which means that the future supply of iron ore may have to increase the degree of monopoly. In addition, iron ore giant further control the seaborne iron ore market through the formation of the fleet and other means.
In this case, several large iron ore giants impossible to initiate a price war damage their own interests, but more may be combined to adjust capacity release rhythm, a "joint limit production," man-made iron ore supply situation continues Iron ore prices will remain at a high level, so grab high monopoly profits.
Should take the initiative to increase the proportion of ore interests overseas
Select the initiative to establish an effective overseas iron ore supply base, the equity ratio of imported ore mine accounted raised to a significant level. Such as the proportion of China's total import ore mining rights to 30% to 40%, it will form a major seaborne iron ore trade patterns impact, effectively break the monopoly of iron ore supply situation, a competitive situation, iron ore suppliers to compete for market share forced into a price war, iron ore prices will return to a certain level.
If the future of our country by effectively forcing the establishment of overseas iron ore supply base of imported iron ore prices, the domestic steel industry due to lower raw material costs will be the most direct beneficiaries.
Such as the proportion of China's total import ore mining rights to 30% to 40% of global iron ore supply will effectively form a competitive situation, the price of iron ore imports are expected to be reduced at least $ 20 / ton.
Only in 2013 in accordance with the amount of 800 million tons of iron ore imports are expected to conservative calculations, the domestic steel industry, annual savings of more than $ 16 billion cost of imported iron ore, and further consideration of the total demand of about 30% of domestic iron ore prices will accordingly reduce domestic steel industry iron ore per year cost savings will more than 22 billion US dollars, 10-year cumulative cost savings of iron ore over 220 billion US dollars!
The establishment of overseas investment in iron ore supply base strength of approximately $ 220 / ton, with an annual output of 300 million tons of iron ore supply base to invest about $ 66 billion.
After the iron ore prices lower, the establishment of overseas iron ore supply base investment will inevitably decline in earnings or even losses occur. However, this decline or losses significantly lower than the cost of the domestic steel industry, iron ore prices due to the savings, much lower than revenue in China's economic and social development due to cost reduction obtained from the overall level of the country is considered a huge benefit.
China's huge demand for iron ore and iron ore resource endowment poor objective conditions, determines the future for a long period of time will mainly rely on imports of iron ore supply route (estimated accounting for about 70%), domestic iron ore can only play to adjust and complementary roles (accounting for about 30% is expected).
Down in overseas iron ore supply was highly monopoly situation, passively waiting, hoping iron ore suppliers active expansion and opened a lot of desire to compete on price is not reality.
Therefore, strengthening the domestic iron ore production and scrap resource utilization, while only increase support for Chinese enterprises to "go out" to establish an effective overseas iron ore supply base, in order to break the iron and steel industry, the kinds of passive situation fundamentally, in order to make Iron ore price stability down, this is the inevitable choice of China's iron ore resource supply security strategy.
