It is urgent to establish an iron ore security system in our country

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There seems to be new progress in India's turmoil over iron ore tariffs. According to the relevant person in charge of the China Chamber of Commerce for Import and Export of Minmetals and Chemicals, the Indian government is likely to give up the additional 300 rupees / ton ( About 7 US dollars / ton) iron ore export tax, Chinese steel companies are enjoying more say in the unspoken rules of international iron ore prices.

The iron ore price turmoil in the international market has been rising one after another in recent years, but before, most of the negotiations revolved around long-term contract mines, but this time, spot mines are making waves. An industry observer said that in addition to jointly fighting for more right to speak on iron ore prices, my country's iron and steel enterprises must fundamentally change the situation that iron ore supply has been controlled by others for a long time. He suggested that the iron ore supply guarantee system should be established by signing long-term agreements with Indian iron ore exporters, joining hands with the domestic steel industry to make it bigger and stronger, and increasing investment in overseas mines. 

Iron ore trade should focus on long-term agreements

On March 1, the temporary policy of the Indian government to increase tariffs on iron ore exports began to be implemented. Although the Indian market only accounts for 22.92% of China's iron ore imports, the implementation of this policy has resulted in a disguised price increase of 10% to 15% for Indian iron ore entering China.

Chen Xianwen, head of the market research department of China Iron and Steel Association, said that in 2006, my country imported 326 million tons of iron ore, of which Indian ore accounted for 22.92%, and the import volume accounted for a large proportion. If the Indian government's proposal to set export tariffs is passed by the Indian Congress, it will have a greater impact on my country's steel industry, especially for domestic steel companies that have relied heavily on Indian iron ore over the years. more obvious.

In fact, Indian iron ore has always occupied the Chinese market with the characteristics of low grade and low price. However, when its price is lower than that of Brazilian iron ore and Australian iron ore, some small and medium-sized steel mills are willing to use Indian ore more because they are more concerned about cost. Especially the small and medium-sized steel production enterprises in the central and southeastern regions of my country, due to the lack of local subway and mine resources and insufficient scale to sign long-term agreements with the three giants, rely on Indian mines for their main production all year round, and have certain dependence on Indian resources.

According to the "Beijing Iron Ore Guideline Price" recently announced by the China Chamber of Commerce for Import and Export of Minmetals and Chemicals, 63.5% of Indian iron ore has an FOB price range of 63 to 64 US dollars per ton, and a CIF price range of 85 to 86 US dollars per ton. Ton. If India imposes an export tariff of about US$7/ton, it means that the export price of Indian iron ore will rise by 11% in disguise. An industry observer told reporters that the public price of international iron ore in 2007 only rose by 4 to 6 US dollars / ton, an increase of only 9.5%, and the one-time increase in India's export tariff of 7 US dollars / ton will make China, Japan, Countries such as South Korea that mainly import Indian iron ore are difficult to accept. "The key issue is that China accounts for more than 80% of India's iron ore exports, and India will increase export tariffs and China will suffer the most."

The China Iron and Steel Association put forward a proposal for this. In the long run, the purchase of imported iron ore should try to establish a long-term agreement with India. The implementation of this tariff will not have much impact on Japan and South Korea. The main reason is that they have a relationship with India. Long-term agreements have been signed between Indian iron ore suppliers, and the supply volume and supply price have been locked. In addition to Baosteel Group, my country's iron ore imports from India are basically spot trade.

Steel companies join hands to deal with rising iron ore prices

According to people familiar with the matter, it is very likely that the Indian government will eventually abandon the temporary tariff policy. As the initiator of the introduction of the iron ore export tariff, Indian Finance Minister Chidambaram said for the first time recently: "We will make an appropriate choice based on the opinions and factors of all parties."

The reporter learned that in addition to the strong opposition from Indian ore and exporters, the "opinions and factors of all parties" mentioned by Chidambaram, the joint boycott from Chinese iron ore importers and steel companies also imposed a strong impact on the Indian government. A lot of pressure. The China Chamber of Commerce for Import and Export of Minmetals and Chemicals and the China Iron and Steel Association have held emergency meetings to discuss countermeasures. Sinosteel Group, China's second largest iron ore importer, took the lead in stopping iron ore imports from India.

At present, the China Iron and Steel Association has reached a consensus with several large domestic steel mills and more than 10 steel companies that imported a large amount of iron ore from India in 2006 on the issue of additional tariffs on Indian iron ore exports: rejecting Indian iron ore unilaterally At the same time, it called for a joint boycott of all abnormal trade practices caused by India's increase in iron ore export tariffs.

The China Iron and Steel Association and some steel mills proposed that the contracts signed before March 1 insisted on the original signed price, and refused to unilaterally propose or implicitly impose tariffs on India with any pretexts, reasons or disguised methods to pass them on to my country. enterprise.

Beijing United Metals analyst Hu Kai analyzed that if Chinese companies cannot resist the unreasonable price increases demanded by Indian mining companies, they will not only have to bear the increased cost of Indian ore prices, but also bear the additional cost of the increase in Indian ore prices. The cost of rising prices in the national and domestic iron ore markets has increased. What's more serious is that after the reduction of the import quantity of Indian ore resources, it is very likely to break the current seemingly balanced supply and demand relationship, which will have a considerable impact on the international iron ore negotiations next year.

It is worth noting that an important reason why China failed in the long-term iron ore contract negotiation in the past few years is that the concentration of Chinese iron ore traders is not high, and they cannot stick to the front and blindly chaotic imports. It is understood that in this iron ore price hike from India, the "joint efforts" of Chinese steel companies have caused a lot of losses to Indian iron ore exporters. The Federation of Indian Mines is lobbying the government in New Delhi to change the tariff policy; Chinese steel producers and trade importers are united and have given effective support to the camp in India that opposes the policy.

"In fact, the low concentration of the domestic steel industry is the fatal injury that China is always weak in the iron ore negotiation." Zheng Dong, a steel analyst at Guosen Securities Economic Research Institute, pointed out that the structural adjustment of China's steel industry is not in place and the ore Issues such as trade disorder are the soft underbelly of Chinese steel companies in iron ore negotiations. Only by first solving "their own problems" can we unite with the outside world.

An analyst who has been tracking iron ore prices for a long time told reporters: Under the current severe situation of small scale, large number and low concentration of Chinese iron and steel enterprises, the key is to play the role of iron and steel industry associations in order to truly cooperate with foreign countries. , Iron and Steel Association to represent the overall interests of China's steel industry.

The pace of overseas investment in mines is accelerating

"Just now, the price of long-term agreement mines in Brazil and Australia has been raised, and spot mines in India have begun to ask for sky-high prices again. The reality that my country's iron ore supply is controlled by others makes it necessary for domestic iron and steel enterprises to go overseas to find mining cooperation plans, in the form of 'steel-mine alliance'. New iron ore import resources will inevitably become an inevitable choice for my country's iron and steel enterprises." Xu Xiangchun, director of Lange Steel Network Information Research Center, said.

Zou Jian, President of China Association of Mining and Metallurgical Enterprises, said that steel companies such as Japan and Europe have long-term investment and cooperative relations with iron ore companies, which is why every iron ore giant takes the lead in opening a breakthrough from Europe and Japan. However, the number of overseas mines that Chinese steel companies have a stake in is very small. As the world's largest steel producer and iron ore importer, China has almost no say in international iron ore pricing.

It is predicted that in 2010, the world's seaborne iron ore demand was 945 million tons, an increase of 279 million tons compared with 2005. Among them, China imported 524 million tons of iron ore, an increase of 249 million tons compared with 2005, accounting for 89% of the future increase. In 2010, the supply of iron ore was 938 million tons, an increase of 267 million tons compared with 2005. Among them, the world's three largest iron ore giants, Brazil's Vale, Australia's BHP Billiton and Rio Tinto, accounted for 78% of the increase in supply. In this way, the future iron ore price will remain in the hands of the three giants.

"China must change the current situation of expanding domestic steel production capacity and invest in mines, especially overseas mines. If China can control the amount of iron ore exceeding 100 million tons, China can completely change the global iron ore supply and demand pattern." An industry expert said in an interview with reporters, "Although the possibility of Chinese companies taking shares in the world's three major iron ore giants is slim, if you carefully analyze the distribution of iron ore resources in the world and find another way, there will still be many investment opportunities."

In fact, in recent years, some domestic steel companies have begun to develop overseas iron ore. On June 7, 2005, after two years of tracking, Shougang Group won the controlling stake of the magnetite project with an annual output of 5 million tons in the Extension Hill area of ​​Western Australia; on June 6, China National Machinery Equipment Import and Export Corporation and other enterprises Jointly obtained the Belinga iron ore project with reserves of more than 500 million tons in Gabon, Africa; before that, CITIC Pacific also bought an iron mine in Western Australia with a total reserves of 6 billion tons. In addition, Baosteel, Anshan Iron and Steel, Sinosteel and many other enterprises have gone abroad, and the pace of Chinese enterprises' overseas investment in iron mines is accelerating.