Under the influence of bad news, the iron ore futures prices fell sharply on July 4 and 5. However, as the market gradually digested the impact of the news, the price of the beginning of this week rose again. The main contract closed at 880.5 yuan/ton on Tuesday, and the intraday price approached the 900 yuan mark. Analysts pointed out that the short-term strong fundamentals still provide support for iron ore prices, but as upstream supply increases, demand ends limit production, and fundamental uncertainties increase, it is still necessary to be alert to the risk of falling prices.

Stocks rise

Although the iron ore futures price was once under pressure due to the short-term negative news, the price of the iron ore was once again rising at the beginning of this week. As of Tuesday's close, the main 1909 contract closed at 880.5 yuan/ton, up 4.08%.

The rebound in iron ore prices has also triggered related listed companies to follow higher. Data show that as of yesterday's close, iron ore concept stocks Hongda Mining, Jinling Mining, Hainan Mining, respectively, rose 1.77%, 2.21%, 2.11%, the three stocks since the beginning of this year, the cumulative increase of 31.47%, 92.28%, 29.91%.

How much is iron ore price "expensive" this year?

According to statistics, as of last week, the main contract for iron ore futures has risen from 491.5 yuan / ton to 902 yuan / ton since 2019, an increase of 83.52%; the spot of gold cloth in the port rose from 481 yuan / ton to 877 yuan / ton The increase was 82.33%. During the same period, the price of overseas SGX main contract rose from US$69.47/ton to US$118.02/ton, an increase of 69.89%; the Platts index rose from US$72.35/ton to US$126.36/ton, an increase of 74.64%.

“As iron ore shipments and port inventory continue to decrease, it is a recognized fact that iron ore annual supply and demand gaps are present.” Chuancai Securities Research pointed out that according to the latest production plan since mid-year, the output of the four major mines in 2019 is expected. The year-on-year decline was 52.6 million tons. Even considering the increase in production of second-line mines, non-mainstream mines and domestic mines, the supply of global iron ore in 2019 still has a shrinkage of 13.5 million tons.

Be wary of falling risk

It is worth mentioning that since June, the Brucutu mine in Vale has announced a resumption of production, and the shipments of Australia and Pakistan have rebounded significantly. The steel mills in Hebei have begun to strictly limit production. Analysts pointed out that there may be some changes in the supply and demand margin of iron ore.

The above-mentioned institutions believe that the gap in the first half of the year is mainly supplemented by the decline in iron ore stocks in domestic ports due to the continuous supply and demand gap. After entering July, with the seasonal recovery of supply and the expansion of domestic blast furnace production, the decline of port iron ore stocks may gradually slow down, but it is still difficult to reverse the gap between supply and demand during the year. However, considering the adjustment of short-term futures sentiment, the risk of policy regulation will increase, and the mine price may have a callback risk in the second half of the year. In the long run, with the end of the domestic and international expansion cycle, the bottleneck of iron ore asset capacity has gradually emerged, and the equilibrium price of the mine price is expected to remain at the center position of the domestic mine cost of 80-100 US dollars. It is recommended to pay attention to the relevant targets of Hebei Xuangong, Jinling Mining and Hainan Mining.

Liu Huifeng, a senior researcher at Donghai Futures, said that in the short-term, the fundamentals of iron ore have not changed much. The operating rate of blast furnaces has dropped slightly below market expectations, the inventory of iron ore ports has continued to decline, and the futures are highly discounted (currently 1909 contract discount) In the context of the spot price of 92 yuan / ton, the recent 1909 contract is more inclined to take the "spot strength + discount repair" logic. In view of the market outlook, it is expected that the price of minerals will gradually decline from the end of the third quarter to the fourth quarter.