Earthquake boosts iron ore prices

The Japanese steel mills are the major customers of the three major iron ore suppliers in Asia except China. In 2010, Japan’s total iron ore imports reached 134 million tons. Affected by the quake news, the price of iron ore swap contracts fell by 4.15% in April at the London Clearing House on March 11th, the largest decline since 2011.

The raw materials and fuel needed by the Japanese steel industry are almost entirely imported. According to relevant data disclosed by the Japan Iron and Steel Federation, its average sea transport distance is more than 6,000 sea miles.

The current situation of the major steel mills in Japan is still continuing. The latest news on the 15th of March showed that the Nippon Steel Kabushi Plant was located in Iwate Prefecture, where the disaster was severely affected. Although the electric furnace and wire rod production line had not been damaged, the terminal equipment had been severely damaged. The large-scale suspension of production of Japanese steel mills will inevitably lead to a decrease in the demand for iron ore, which will further reduce the price of iron ore.

Under normal circumstances, it takes 20-50 days from Australia, Brazil, and transporting iron ore to Asia. This sudden earthquake will inevitably disrupt the order of iron ore supply and demand. This will result in orders that have already been placed. , due to damage to the pier, equipment damage and other force majeure factors can not be released.

According to estimates by the Nishishin Shinkansen, if these steel mills stop production for six months, the seaborne iron ore market may lose 22,200,000 tons of iron ore demand. In addition, several brokerage firms expect that the short-term iron ore demand will decrease by even 30 million tons. . Each month, it is conservatively estimated that there are about 3.5 million tons of iron ore to be sold in new markets.

In addition, since February of this year, the global demand for iron ore has shown a downward trend, and international ore prices have begun to decline. In February, China imported 48.64 million tons of iron ore, which fell sharply year-on-year and month-on-month.

The data shows that as of March 11, China's iron ore port inventory has reached 80.4 million tons, an increase of 6.48 million tons from the beginning of this year. Due to the continuous decline of the steel market in the early stage and the high inventory of iron ore ports, importers have obviously changed their willingness to purchase goods in the early stage and adopted a wait-and-see attitude. This earthquake in Japan will inevitably further exacerbate the wait-and-see mood of the market, and in the short term it will probably cause the international iron ore prices to accelerate decline.

On March 14th, the imported iron ore market continued to operate weakly and was sold lightly. Up to now, 63.5% of the mainstream of printing ink in the 1270-1300 yuan / ton; 58% of the printing powder in the 970-1000 yuan / ton, PB powder in the 1220-1240 yuan / ton. Mining this year has fallen more than 10%.