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Li Xinchuang: China's iron ore industry is facing a situation - the "five major" have existed for a long time

In the "2016 (fifth) China Iron and Steel raw material Market High-end Forum" held on December 10, Li Xinchuang, president of the Metallurgical Industry Planning Institute, made a keynote speech on the "Global iron ore market analysis and outlook", in the speech, Li Xinchuang said that China's iron ore industry five forms, and these five situations will exist for a long time.

(1) The international iron ore trade is highly concentrated, and the supply exceeds the demand for a long time.

In 2016, the four major mines will increase production by 50 million tons. In the future, the investment of new production capacity such as Royhill project, Vale project and project expansion will exacerbate the market surplus. As the largest demand for iron ore in China, the steel industry has entered the reduction of development, iron ore demand into the decline channel will be an indisputable trend, and in the short term other countries or regions can not make up for the slowdown in China's demand. Therefore, from a global perspective, the pattern of iron ore supply exceeding demand will exist for a long time.

(2) China's high dependence on imported iron ore will exist for a long time

The average cost of domestic key statistics iron ore is about 80 US dollars/ton, which is nearly 2-3 times the production cost of international iron ore giants, and the market competitiveness is weak. At the same time, although China's steel into the reduction of development, but will remain at a high level of operation, the demand for iron ore is still huge. It is expected that in 2030, China's external dependence on iron ore will remain at more than 85%.

(3) Iron ore prices will be low volatility operation will exist for a long time

In the context of the long-term existence of oversupply of iron ore, under the trend of reducing the development of steel production, and in the future of steel production concentration, iron ore prices will be maintained in a reasonable range, that is, low shock operation.

In the short term, the oversupply situation is difficult to change substantively, and the mine price will fluctuate at $50-70 / ton, in the medium and long term, the mine price may rise, but it is difficult to return to the high level of previous years. By the end of the "13th Five-Year Plan", the mineral price was basically maintained between 55-75 US dollars/ton.

(4) Prominent constraints on resources and the environment will exist for a long time

As the national economic development enters the "new normal", especially during the "13th Five-Year Plan" period, the implementation of the "five in one" overall layout and the "four comprehensive" strategic layout, the new environmental protection law and energy policy are becoming stricter, the development environment of iron ore enterprises will become increasingly harsh, and the contradiction between resource development and environmental constraints will become increasingly prominent and long-term.

(5) The trend of scrap steel gradually replacing iron ore will exist for a long time

The output of scrap steel resources in China has reached a considerable scale, and in the next 5-15 years, the output of scrap steel resources in China will gradually enter the fast lane, and the output of crude steel will enter the downward channel, and the future scrap steel resources will increasingly become an important supplement to iron ore resources. Therefore, the share of scrap replacing iron ore will generally show an increasing trend.

Editor: Song Yujeng Source: Mysteel