In May, the release of steel production capacity to maintain a high level, iron ore demand is more robust, prices continue to rise. With the late increase in supply and weakening demand, iron ore tightness is expected to decline significantly, and prices are difficult to continue to maintain high levels.

A, China's iron ore price index continued upward

According to the Steel Association monitoring, at the end of May, China Iron Ore Price Index (CIOPI) was 357.83 points, up 23.09 points, or 6.90%. Among them: domestic iron ore price index of 308.45 points, up 21.62 points, or 7.54%; imported iron ore price index of 367.16 points, up 23.36 points, or 6.79%.

From a full month trend, the average CIOPI composite index in May was 351.18 points, up 20.86 points or 6.32% over the previous month. Among them: domestic iron ore price index average of 298.10 points, up 13.50 points over the previous month, up 4.74%; imported iron ore price index average of 361.22 points, up 22.25 points, up 6.56%.

Second, the price of domestic iron ore concentrates from the decline to rise, the price of imported powder continues to rise

At the end of May, the CIOPI domestic iron ore concentrate price with tax was RMB678.38 per tonne, up RMB47.55 per tonne, or 7.54%; the CIOPI CIF import ore price was US$99.17 per tonne, up US$6.31 per tonne, or 6.80%.

On average for the whole month, the average domestic iron ore concentrate price including tax was RMB655.62 per tonne, up RMB29.69 per tonne or 4.74% from the previous month. The average CIF price of imported fines was US$97.57 per tonne, up US$6.01 per tonne, or 6.56%, from the previous month. Among them: from May 6 to May 27, up from US$93.00/ton to US$104.18/ton, from May 27 to the end of May, down from US$104.18/ton to US$99.17/ton, generally oscillating at a high level.

Third, the late iron ore price trend analysis

Since late January this year, iron ore prices rose sharply, on the one hand, due to the faster release of domestic crude steel production capacity, on the other hand, also by the market is expected to tighten the impact, resulting in high prices. With the gradual recovery of foreign mine supply and steel production back down, iron ore demand strength will be weakened, the late iron ore prices are difficult to continue to maintain a high level, which will be a shock fall trend.

1, steel production fell back, iron ore demand intensity has been reduced

According to the Iron and Steel Association statistics, the first half of May, according to the average daily output of member steel enterprises estimated that the national daily production of crude steel was 2,831,600 tons, a decline of 0.10%. At the same time, due to a significant increase in the amount of scrap steel, the demand for iron ore has weakened, coupled with the increase in domestic ore, the late tightening is expected to significantly reduce the market is difficulty to support iron ore prices continue to maintain high levels.

2, imported ore port inventory decline narrowed, and the main mine shipments rebounded significantly

At the end of May, the national import iron ore port inventory was 124 million tons, down 10.29 million tons, or 7.66%, although the ring continued to decline, but the decline narrowed by 1.02 percentage points compared with last month. According to relevant statistics, in the second week of May, Brazil's iron ore shipments amounted to 7.12 million tonnes, an increase of 60.76% YoY, and Australia's iron ore shipments amounted to 14.81 million tonnes, an increase of 25.16% YoY. With the significant increase in iron ore shipments, market supply and demand conditions will be further relaxed.

3, iron ore prices have been at a high level, far exceeding the rise in steel prices during the same period

According to the Iron and Steel Association monitoring, at the end of May, China Steel Price Index (CSPI) for 111.10 points, down 1.39% ringgit, down 3.45% year-on-year, while the same period CIOPI c.i.f. prices of imported iron ore rose 6.9% and 48.07%, and steel prices trend serious deviation. Iron ore prices rose sharply, a serious squeeze on the benefits of steel enterprises, January-April Steel Association member companies to achieve sales revenue rose 11.05% year-on-year, to achieve profits fell 19.38%, mainly due to the impact of the sharp rise in raw fuel prices. With the shrinking profits of steel enterprises, steel production will be back down trend, iron ore demand will also be reduced trend, the price will also fall accordingly.