China's steel industry accelerates the pace of res

2022-08-14
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The price rise of the two Tuos accelerates the pace of restructuring of China's steel industry

the price rise of the two Tuos accelerates the pace of restructuring of China's steel industry

China Construction machinery information

Guide: the ultimate winner of this price war is undoubtedly Rio Tinto and BHP Billiton. After several struggles, China's steel industry is finally doomed to bow and yield. The impact of this price rise on the downstream industry of steel will also be immediately apparent. The Sino Australian iron ore negotiations will finally be held on June 30. 6. New materials related to the culture and art industry

"the ultimate winners of this price war are undoubtedly Rio Tinto and BHP Billiton. After several struggles, China's steel industry is finally doomed to bow down and yield. The impact of this price rise on the downstream industry of steel will also be immediately apparent."

the China Australia iron ore negotiations finally ended before the deadline of June 30

After nine months of suffering, Baosteel finally made up its mind to reach an iron ore price agreement in 2008 with Rio Tinto, Australia's largest iron ore supplier, on the evening of June 23. The price of fine ore increased by 79.88% on the basis of the previous year; Lump ore rose 96.5%, the highest increase in iron ore prices since 2005

as Rio Tinto is a pioneer in the negotiation between Australia and China, it is expected that BHP Billiton will also sign a contract with China within a few days according to Rio Tinto's pricing

the final winners of this price war are undoubtedly Rio Tinto and BHP Billiton. After several struggles, China's steel industry is finally doomed to bow down and yield. The impact of this price rise on the downstream industry of steel will also be immediately apparent

helpless outcome

two iron ore prices appeared for the first time in the negotiation of the international iron ore long-term association

as early as February this year, Japan's Nippon Steel and South Korea's Posco and vale of Brazil set benchmark prices with increases of 65% and 71%. However, BHP Billiton and Rio Tinto did not agree. They broke the previous international practice and asked for an increase of at least 85% on the grounds that the increase did not reflect the market supply and demand, resulting in a stalemate in the negotiations

Rio Tinto and BHP Billiton have a tough attitude, and have repeatedly threatened that if they fail to achieve the purpose of price increase, they will stop supplying according to the old terms after the expiration of some annual contracts on June 30, and instead sell iron ore to the spot market with higher prices

in fact, China was also very tough in this negotiation. CISA has publicly rejected the price requirements of aokuang for many times. At the last moment of the negotiation, the spot market price of iron ore and sea freight fell. But these moves failed to make China recover the situation

Xu Xiangchun, a senior expert in the steel industry, said that from the perspective of supply and demand, due to the strong growth of global steel demand, iron ore supply has been in a relatively tight state, which is the fundamental factor supporting the rise of Australian mining prices

although the soaring price of iron ore has shown signs of weakness since late May, he believes that this is actually an act taken by China to create a good atmosphere for Baosteel's negotiations. The sharp decline of ocean freight is due to the speculation of futures. Speculators usually short, resulting in the price falling first, and then the system will not work normally after the transmission hydraulic oil is polluted. In this way, the profit shorting of Lubrizol, whose headquarters is located in Wycliffe, Ohio, will be relatively large. BHP Billiton and Rio Tinto have acted abnormally during this period of time, and they may have this purpose without continuing to charter

Baosteel was also forced to accept the ore price rise. Zeng Jiesheng, an iron and steel researcher, believes that if the negotiations break down and the two Tuo and Indian exporters jointly control the volume of shipments to China, Chinese steel mills will pay more than $30 for each ton of iron ore imported. In addition, many steel mills have signed iron ore COA agreements with transportation enterprises. If the negotiations break down, these agreements will also be meaningless, resulting in unnecessary losses

breaking the negotiation mechanism for the first time

however, compared with the breaking of the annual international iron ore negotiation mechanism for the first time, price hikes are nothing new. After all, iron ore prices have risen for six consecutive years

this negotiation mechanism was formed in the 1970s, which means that if any party reaches an agreement, the other parties to the negotiation will accept the price increase reached. The signing of the agreement between Baosteel and Rio Tinto will add many uncertainties to the future iron ore negotiations. Next year, Australian suppliers will still put forward the same requirements. Another possibility is that Vale will no longer be the first to reach an agreement with the steel plant, but wait for the Australian supplier to reach an agreement and directly accept the increase it has reached

where the iron ore negotiations will go is unknown. After all, Liangtuo and vale account for more than 70% of the global seaborne trade resources of iron ore. even if the iron ore market is oversupplied in the next few years, they can still rely on their monopoly position to artificially control output, create market tension, and maintain high iron ore prices

Xu Xiangchun believes that it is difficult to change China's weak position in iron ore trade in the short term, speed up the merger and reorganization of iron and steel enterprises, and actively seek resources overseas, so as to fundamentally reverse the situation. Although the process is long, it is a must

the cost of steel enterprises surged

in the face of the pressure of rising prices of the two expansion projects, it has become an indisputable fact that Chinese steel enterprises are facing rising costs. Rising costs will squeeze the profits of steel producers

Baosteel just announced the price of the third quarter, and the increase of some products ranged from 200% to 400%. However, the substantial increase in iron ore prices by the two development projects has made Baosteel's dream of price increases offsetting rising costs come to naught

Baosteel insiders said that as China's inflation pressure remained high, the government did not change the fundamentals of macro-control tightening, and it became unrealistic to expect price adjustment to cope with the rise in costs. The rise in steel prices is far from keeping up with the rise in raw material prices. In addition to iron ore, the price of coke is also rising this year, which has become the biggest cost pressure for steel enterprises. At present, enterprises can only rely on themselves to absorb this part of the cost

take May this year as an example, the year-on-year growth of raw materials such as iron ore and coke is about 100%, while the growth of steel is about 40%, and the profit space per ton of steel is constantly shrinking. At present, most steel mills require downstream enterprises to pay cash when purchasing steel to relieve financial pressure

however, according to the analysis of insiders, for the steel industry, the rise in the negotiation price is bad in the short term, and may be conducive to further increasing the profit level gap between large steel enterprises and small enterprises in the long term. At present, small iron and steel enterprises have reached the break even point, while the profit level of large iron and steel enterprises is still very high. The sharp rise in iron ore prices is conducive to accelerating the elimination of backward production capacity in the iron and steel industry, as well as accelerating the merger and reorganization of the industry, so as to control the disorderly rise of domestic iron and steel production capacity

according to the report of Ping An Securities, in 2008, the cost gap between different steel manufacturers was huge, among which the difference in ore price was particularly serious. After the sea freight price was locked, the price per ton of ore was less than 1000 yuan, while the price per ton of ore for steel manufacturers that completely rely on spot ore was more than 1500 yuan. In this way, the price gap of iron ore was 500 yuan/ton, and the cost gap of steel was as high as 800 yuan/ton

downstream industries are affected

China's steel industry is in an era of "high cost and high price". While the profits of steel enterprises are squeezed, the cost pressure will also be slowly transmitted to downstream enterprises, such as shipbuilding, automobile and other industries

an employee of China Shipbuilding said that the company's profits could not be unaffected by the rise in steel prices. Steel cost accounts for about 20% of the total raw material cost of shipbuilding industry. Since the second half of 2007, the price of marine steel has returned to the upward trend. As the main raw material of shipbuilding, the price trend of steel has a great impact on the shipbuilding cost. In addition, the implementation of new industrial technical standards and specifications this year has also promoted the shipbuilding cost. In the first quarter, due to the use of last year's inventory steel, the pressure of rising costs of Chinese ships was slightly lighter, but the company's gross profit margin may decrease slightly in the second half of the year, but the specific amount cannot be estimated

it is reported that a 50000 ton bulk carrier basically needs 11000 tons of steel. With the increase of 800 yuan/ton of steel, the cost of each ship will increase by more than 8 million yuan. At present, the berth is tight and the delivery time is generally arranged to 2011, so the ship price will remain high

the China Shipbuilding Industry Association estimates that the rise in steel prices will increase the cost of China's shipbuilding industry by 3billion yuan in 2008. Due to the rise in the price of upstream raw materials, the appreciation of the RMB, the increase in the interest burden and the rise in labor costs, the grinding surface of the sample and the polishing disc should be absolutely parallel and evenly pressed on the polishing disc. The profits of the shipbuilding industry have been severely squeezed, and the risk of late delivery has also begun to appear. However, for large shipbuilding enterprises, such as CSSC and CSIC, they have long-term and stable supply agreements with large steel enterprises, which have little impact. Private and small and medium-sized shipbuilding enterprises will be relatively affected by market fluctuations

and the automotive industry is crying bitterly. Every 10% increase in steel prices will cause the gross profit margin of micro cars to drop by 1 Percentage points

Zhao Xuegui, an analyst at Guosen Securities, believes that under the background of slowing industry demand and rising oil prices, there are obvious signs of recession in the automotive industry, and the rise in steel prices will further hit the industry

in fact, the rise in steel prices has become a trend in recent years, and it is far from the above industries that are under pressure. Construction, machinery, household appliances, containers, railways, petrochemical and other industries have occupied the top 10 of the main steel consumption in recent years. When the wave of cost pressure hits, only enterprises with advanced technology and fine management can withstand the test and become stronger and stronger

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