Recently, a wave of domestic iron ore futures market "cliff-style" down market. Data show that as of May 20, the main contract for iron ore has dropped to the lowest 695 yuan / ton, for the first time since listing below 700 yuan / ton mark.
Deputy director of the Institute for the new Lake futures Wengming Xiao said that the recent acceleration of iron ore futures market dip phenomenon of excess market supply is the main reason. "As the cost of foreign mining is relatively low, there is profit to speak of, four mines in recent years has been the expansion of production capacity in the next two years to add a very large amount of iron ore, iron ore while domestic demand growth is slowing, Therefore ore prices will accelerate the decline. "Wengming Xiao said.
However, it seems the market, in addition to the excess supply, the market for iron ore imports a breach rumor mill is undoubtedly the most direct cause. Recently, the market rumors, a steel mill in northern China has 80 million tons of iron ore ordering breach allegedly ordering batch of iron ore price $ 120 / ton.
Futures Daily reporter learned that the imported ore prices have fallen below $ 100 / t. Monitoring data show that as of May 19, Platts 62 percent iron ore index fell to 98.75 U.S. dollars / ton, is down 6.5 U.S. dollars / ton, representing a decrease of 20.4%.
Relevant institutions researcher told Futures Daily Reporter, the current iron ore price decline has been greater than the margin steel pre-ordering, if ore prices continue to fall, iron ore defaults may further exacerbate the situation, which will lead to further accelerate the emergence of iron ore port sell-off phenomenon.
"At present, there are a lot of imported iron ore ‘rejection of the goods‘ phenomenon, harbor, sea drift has iron ore prices fell by more than a margin greater than steel performance risk of default." Researcher bluntly. However, at the same time, he also said that the current acceleration ore price dropping, steel procurement more cautious, traders dumped goods would be more difficult, iron ore prices have room to fall.
My steel net imports of ore analyst Li Xiaojie in an interview to reporters confirmed the iron ore port phenomenon "dumped goods". "At present, some traders to be able to repay bank loans, the situation does appear to be low-cost shipping, but this is not a common phenomenon in the market." Li Xiaojie said.
According Futures Daily reporter, due to funding constraints, last November, December domestic mills and traders financing demand, many enterprises to the bank to open a short-term letters of credit, letters of credit to May this year, will focus on the maturity, steel mills and traders are faced with the reality of the repayment of bank loans.
Li Xiaojie said that the current iron ore default risk is still controllable, while iron ore prices fall, banks to traders margin; on the other hand, if the credit expires, the trader would be the best option to speed up shipment realized capital return, and then return the money to the bank, "Now the market is not yet the worst degree, do not panic too much."
The researchers concluded that, due to the credit expires concentrated mainly in May, so after a May letter of credit repayment period, the iron ore market will be improved.