The sharp rise in iron ore prices has caused Chinese steel companies to be in trouble, and has already attracted the attention of relevant state departments. This has accelerated the implementation pace of the iron ore agency system that has been brewing for a long time but has not been implemented.
In the gap of the 2011 Metallurgical Products Conference held yesterday, Luo Bingsheng, a special analyst of China Iron and Steel Association (hereinafter referred to as “China Steel Associationâ€), said in an interview with “First Financial Daily†that “Implementation Rules for Imported Iron Ore Agent System†It will be officially announced soon. The implementation of this method will cancel the two prices of imported iron ore in the domestic market (long-term agreement price and spot price), prevent artificial speculation, and help regulate the imported iron ore market.
At the same time, Xu Xu, president of China Minmetals Chemicals Import and Export Chamber of Commerce (hereinafter referred to as “Minmetals Chamber of Commerceâ€), said that in order to actively respond to the new situation of iron ore indexation, China can accelerate the formulation of influence based on the shortage of international indexes. A powerful and authoritative Chinese iron ore index.
Price "double track" is expected to end
In 2010, the domestic concentrates of 77 large and medium-sized iron and steel enterprises of China Steel Association rose by 46.44%, imported mines rose by 45.21%, coking coal rose by 26.45%, injection coal rose by 22.07%, metallurgical coke rose by 12.8%, and scrap increased by 13.68%; Only one imported iron ore, the annual import of 618.644 million tons, the average CIF price per ton rose by 48.51 US dollars, and the foreign exchange paid more than 30.01 billion US dollars, equivalent to 1980 billion yuan, all to enter the steel production costs.
In 2010, the cost of steelmaking pig iron production increased by 23.1% year-on-year, while the domestic market price of steel ( 0 , -4792.00 , -100.00% ) rose by 16.58% over the previous year, which still cannot offset the impact of cost reduction. Luo Bingsheng believes that this is the main reason for the profit of large and medium-sized steel enterprises in 2010 is only 89.713 billion yuan, the annual product sales profit rate is only 2.91%, and the operating efficiency of the whole industry is low.
"At present, the upstream resources are particularly dependent on imported iron ore. In the face of the high monopoly of the three major mining companies, the price of iron ore has risen sharply, the production cost has risen sharply, and the profitability of the whole industry is very difficult." According to Luo Bingsheng, in steel At the recent meeting of the China, China Steel Association and Minmetals Chamber of Commerce, after everyone's joint efforts, considering the full implementation of the import iron ore agency system, it has been unanimously endorsed by the member companies, and agreed to actively promote the import of iron ore agents. System, reasonable control of port imports of iron ore stocks.
In fact, the iron ore agency system has been raised for a long time, but has not been implemented. On April 2, 2010, Sinosteel Concord Minmetals Chamber of Commerce passed the “Qualification Standards for Iron Ore Import Enterprises in 2010â€, “Implementation Rules for Imported Iron Ore Agents†and “Imported Iron Ore Contracts†at an internal meeting. Reporting Registration and Its Flow Registration Regulations.
However, at this meeting in April last year, the China Steel Association and the Minmetals Chamber of Commerce had differences over who pushed up the price of iron ore. Since then, the "Implementation Rules for Imported Iron Ore Agents" has not been officially announced. Luo Bingsheng said that the document will be issued in the name of Sinosteel Concord Minmetals Chamber of Commerce as the industry's rules and regulations. He said: "If it is not implemented, the necessary penalties should be given. Everyone should discuss ways to formulate penalties to ensure the implementation of the iron ore agency system."
In terms of global iron ore imports, China is the only country with two import prices. Before the annual long-term negotiation mechanism was broken, one price was the annual long-term agreement price, and the other was the spot price of the Chinese port.
Iron ore China Index
Since April last year, the iron ore annual negotiation pricing model, which has been in existence for more than 20 years, has been forced to change to quarterly pricing by the three major mining companies of Vale, Rio Tinto and BHP Billiton, and has adopted index pricing.
Xu Xu believes that the quarterly pricing model may be just a transitional model. As a side of the iron ore monopoly, its deeper purpose is to launch an index that comprehensively promotes iron ore trading with short-term contracts that are shorter in cycle and linked to the spot market index. And financial development, so that its shareholders can obtain huge financial benefits from other sources, "Currently BHP Billiton's strong monthly pricing is a good proof of this."
Less than a year after the global iron ore pricing model changed, on January 29 this year, the Indian Commodity Futures Exchange (ICEX), based in Mumbai, announced the official launch of iron ore futures products. This is also the first exchange in the world to launch iron ore futures.
At present, there are three major iron ore indexes in the world, namely the TSI index of Global Steel (SBB, the parent company of steel index), the MBIO index of Metal Bulletin, and the Platts index of Platts. In order to get a share, financial institutions have been trying to promote the financialization of iron ore. Based on the above three major indexes, starting from 2009, the Singapore Exchange, the London Clearing House, the Chicago Mercantile Exchange, and the Intercontinental Exchange of the United States have successively launched iron ore swap transactions.
Xu Xu believes that China is a major iron ore trading country. The above-mentioned mainstream iron ore indices are designed based on the integrated shipping price of China's iron ore spot market. Therefore, China has a data base for indexing. It belongs to China's iron ore index.
In addition, in his view, under the trend of iron ore indexation development, Chinese steel companies are facing the uncertainty of cost caused by iron ore price fluctuations. By improving the iron ore futures market, it will help Chinese enterprises to control risks.
"In order to better develop the domestic iron ore futures market, domestic and foreign steel companies should be attracted to China's futures market for hedging." Xu Xu said, "In this way, many steel companies at home and abroad enter iron ore. After the futures market, it will promote the expansion of the market, and thus more closely link futures with the spot to prevent market manipulation."
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