Iron Ore Price Change May be More FrequentSep 19, 2010 // Jorja McKinney
Iron ore field, has presented “Ting Feng is the Rain” tension. Beijing on September 6, 2010 Forum on Chinese imports, Feng, vice president of Minmetals the right to disclose your current three major mining companies want to enter into China’s monthly iron ore price with the agreement.
September 7, Baltic Dry Index (BDI) began to increase, on September 8 up to 1.95% increase, to 2975 points, a continuous rise. Compared to 10,000 in 2008 to the crazy situation at every turn, it seems nothing, but analysts DU Wei iron ore joint metal mesh analysis to the reporter that this is because the Chinese iron ore import demand, the boost large-scale Cape-based shipping needs, BDI index trend so strong.
In China’s largest iron ore import port – Rizhao Port, this change has been reflected. Jiang Ming of iron ore import in September 9th traders told this reporter, from August 29 since the iron ore spot prices have to rise above 5%. This is his psychological that medium-sized traders warning level.
The reasons for the rise, DU Wei that is still the first game of the iron ore pricing mechanism. In this increasingly complex super, super long commercial negotiations, supply and demand in the negotiations aimed at who has the absolute right to speak. Three major iron ore suppliers before the quarterly pricing mechanism unilaterally, to be included Indian iron ore spot, stock market forces, etc., all resolved. Followed by quarterly pricing, monthly pricing, or to switch to cash-based, from the current market ups and downs of view, it is very difficult.
Jiang Ming told this reporter that since June of this year, because the quarterly pricing beginning to become possible, the scale of iron ore spot trade began to become larger, their company’s customers range from Shandong and Hebei provinces, extending to the Shanxi Province and the northeast, land. He also predicted that “this continues, the iron ore pricing mechanism is more closer to the spot price development, price volatility will increase dramatically.”
He explained, “It now appears that iron ore spot prices could soon occur below the index price of the phenomenon, the capital needs of traders to market a substantial increase, which will not only squeeze the number of traders, trading will be more entry into the stock market speculation, the price fluctuations will certainly be more obvious. “
Just coaching change in the China Steel Association, a department head on September 8 told this reporter that they had noted that since the second half of 2009, dramatic changes in iron ore trade market, which have aroused their concern that the international the involvement of financial capital, and now may be joined in a number of RMB funds just beginning. “We all know that a lot of buying ore and then store some time, you can make money.”
He said steel companies from China, the demand side, of course, want to adhere to a long association mechanism, “the year the best pricing, quarterly pricing Yeshi consider the scope”, because “the logistics and transport costs do not reduce the current space.”
However, the demand for domestic steel companies, is not monolithic. This year is the “Eleventh Five-Year Plan” last year, due to emission reduction target is still achievable, relevant to tighten macro-control policies, steel companies bear the brunt. Link performance in iron ore, “because the industry under pressure, first of all to suppress the cost of raw materials, iron ore demand immediately weakened, CVRD and Rio Tinto have recently reduced the price of iron ore in the fourth quarter expectations, the reduction was more than 10%. “above head of China Steel Association told this reporter.
In response, DU Wei believes that such a sensitive iron ore price ups and downs, has made a loss of steel producers began, “I do not know when to eat, when to release the stock.” Price changes in one end of changes in the demand side is clearly stronger than supply side.