BHP Billiton says iron ore prices will continue to soar experts: inflection point or to

According to the Voice of Economy's "Yangguang Finance Review," the price of iron ore has been rising rapidly for some time, and domestic steel companies have also complained about it. A financial report issued by BHP Billiton, an international iron ore giant, issued over the past few days has also thrown salt on the wounds of steel companies.

The world’s mining giant BHP Billiton’s financial report released on the 24th showed that in the first half of the year, the company realized a net profit of 13.1 billion U.S. dollars, nearly doubled from the same period of last year, and once again gained a good harvest.

Before BHP Billiton, the other two giants of the mining industry, Vale and Rio Tinto, announced a net profit of 13.3 billion U.S. dollars and 7.6 billion U.S. dollars in the first half of the year, an increase of 150% and 30% year-on-year respectively. The three companies together earned a total of 34 billion U.S. dollars (about 217.6 billion U.S. dollars). According to the statistics of the China Iron and Steel Association, the domestic key steel enterprises in the same period only achieved a profit of 56.4 billion yuan, and the profit of the three major mines is almost 4 times that of the Chinese steel industry.

The significant increase in BHP Billiton's performance was mainly due to strong demand from China. BHP Billiton CEO Marius Kloppers said in a performance report on Wednesday that the sharp increase in international mineral prices over the past 10 years was mainly due to the fact that the rate of supply capacity expansion has not kept pace with market demand growth. He said that inflation and rising costs are hurting the profitability of mining companies. Only companies with better financial conditions can win the competition. He said that with the decreasing availability of global resources, mineral product prices will continue to climb.

Why is there such a phenomenon as "the mine eats meat, the steel mills drink soup", and this phenomenon is not inevitable, when can the price of arrogant iron ore be stopped? The Voice of Economy Special Commentator, China Metallurgical Industry Liu Haimin, deputy director of the Economic Development Center, commented on this.

Supply-demand relationship changes demand increases spreads increase

Moderator: As the global iron ore market presents a monopoly, so in recent years the industry has always been saying that “minerals eat meat, steel mills drink soup”. Is there really such a big gap in reality? What is the difference in profits in the end?

Liu Haimin: This situation does exist. The profits of large and medium-sized enterprises in China's iron and steel industry are equivalent to a fraction of one or several of them. The three major international ores account for 70% of the international maritime market, and a high degree of monopoly is a factor. However, the relationship between supply and demand may still be a fundamental factor.

China's pig iron production was 130 million tons in 2000, and it increased to 590 million tons in 2010, with an average annual growth rate of 16.3%. The increase in pig iron production has increased the demand for ore. The growth rate of domestic ore is less than 16.3%, so our dependence on foreign countries is getting higher and higher, from less than 50% in previous years, and now it has been increased to 65%, which is equivalent to requiring international ore supply to be at least equivalent to China's 16.3% growth rate. Even higher, but this is not realistic.

On the other hand, the reason is high-quality resources, very cheap production costs of iron ore, and after digging out, it is limited to selling iron ore. Rio Tinto and BHP Billiton will occupy these resources first, after all, it is limited. In the case of an expansion of demand, the conditions are not so advantageous, and the cost is slightly higher, and it is initially extracted.

Hurricane Iron Ore Price Has Become Stronger*

Moderator: Will iron ore prices drop or turn around?

Liu Haimin: Depending on our needs, demand is twofold. On the one hand, supply is on the one hand, and demand is on the other, and what we can do is “open source and reduce expenditure”. In terms of “open source”, we should increase our efforts to develop abroad. Domestic iron ore mines must also accelerate development and increase supply.

In terms of closure, do not consume iron ore and do not consume it. First, it is not necessary to use precious iron ore to produce steel, earn a little processing fee, and export a large amount of steel, which is unfavorable to national interests and industrial interests.

Moderator: According to the latest research report, global iron ore production and exports are expected to show explosive growth in five years. Global iron ore production will reach 2.28 billion tons next year and 2.7 billion tons in 2015. . Is China's import dependence on iron ore from the three major mining enterprises likely to weaken, and will prices pull it down?

Liu Haimin: It is generally believed that there will be an inflection point in 2014, but I feel that it may be the inflection point from now on. The sharp increase in iron ore prices has already become a strong end. Of course, the entire economic situation is not yet clear, but the high growth in demand has already passed and may fall to single digits.