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Left-handed futures, right-handed stocks, amphibious investors hunt for iron ore |

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Original title: Left-handed futures, right-handed stocks, amphibious investors huntingiron oreStone source: Commodity Trading Advisors

As an amphibious investor in stocks and futures, Mr. Nie started a new round of “hunting” in late July this year-shorting iron ore futures and buying steel stocks.Looking back now, he was very satisfied with his investment.Since the second half of this year, domestic iron ore futures have experienced a round of rapid decline, and the cumulative decline from the highest point in May is currently close to 40%.This round of iron ore prices fell sharply, which also enabled domestic steel mills to enjoy the dividend of reducing costs and increasing efficiency.

Amphibious investor happiness “drops in pockets”

“At that time, I felt that the iron ore futures trend had formed a short position, so I was determined to make a mid-term layout.” Mr. Nie told a reporter from China Securities News that his current positions in stocks and futures are already profitable and are now gradually “falling into pockets”. “.

From the perspective of futures disks, as of August 25, the main iron ore futures contract closed at 802.5 yuan/ton, a decrease of 347 yuan/ton from the intraday high on July 16. Calculated at 1262.5 yuan/ton, the contract has fallen by more than 36% so far. In terms of A shares, steel stocks have already begun to fluctuate in mid-June this year. Wind data shows that as of August 25, the A-share steel index has risen by 23.72% since the second half of this year.

Iron ore and steel are the upstream and downstream products of the coal and coking steel industry chain.Coke, In addition, a small amount of scrap steel, ferroalloys, injection coal, etc. are used. According to business sources, about 1.6 tons of iron ore and 0.5 tons of coke are used to make 1 ton of molten iron, and other costs are fixed at around 1,200 yuan/ton.

“Currently, long process steel millsRebarThe complete production cost is around 4600 yuan/ton. Based on the port spot iron ore and coke prices of 1012 yuan/ton and 3470 yuan/ton respectively, the current costs of iron ore and coke account for 36.4% of the total cost of the steel plant. 37.8%. “Qiu Yuecheng, director of black research at Everbright Futures Research Institute, told a reporter from China Securities Journal.

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Iron ore is the main charge for steelmaking, and its price drop significantly reduces the cost of steelmaking, thereby increasing the profit of steel mills, playing a very good role in reducing costs and increasing efficiency. According to a person from a northern steel company, the gross profit per ton of steel for long-process steel mills has changed from the loss in early July to the current profit of about 600 yuan/ton, and the profit of short-process steel mills is about 300 yuan/ton.

Expected reversal hits iron ore prices

This round of iron ore price declines since mid-July has been relatively smooth. From the spot point of view, the Platts Iron Ore Index fell from a peak of 222.3 US dollars on July 15 to around 130 US dollars on August 19, a cumulative decline of about 41% in just one month.

“Since late July, the total cost of iron ore has dropped by nearly 500 yuan/ton, the cost of crude steel has dropped by about 540 yuan/ton, and the profitability of steel mills has turned around and increased substantially.” Xie Xu, deputy general manager of the Western Futures R&D Center, told China Securities The reporter said that the current real-time profit of steel mills is between 400 yuan and 800 yuan per ton. There are differences in the profits of different steel products, and the overall level is relatively high. Since 2016, due to the implementation of supply-side structural reforms, the profits of steel mills have improved significantly, and long-term profits have remained at RMB 500-1000/ton. Crude steel output may be suppressed for a long time, and steel mills are expected to maintain normal profit levels.

Many industry insiders pointed out that the policy background of the steel industry to reduce crude steel production is the main logic behind this round of iron ore price decline. In July, the crude steel reduction policy in many regions in China entered the landing stage. Among them, Shandong Province issued a notice clearly requiring that this year’s crude steel output should not exceed 76.5 million tons, Hebei Province will reduce crude steel output by 21.71 million tons, and Shanxi Province will reduce crude steel output. The output of 1.46 million tons, Jiangsu, Anhui, Gansu and other places require the 2020 statistical data as the assessment base to ensure that this year’s crude steel output does not increase year-on-year.

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In the context of the above-mentioned policy requirements, the above-mentioned steel companies said that in July, many steel mills reduced production and maintenance, and the output of molten iron fell sharply. During the same period, the shipment volume of overseas mines was basically stable, the arrival volume increased, and the port iron ore inventory accumulated significantly. Port pressure has also increased substantially. The iron ore supply and demand pattern has undergone major changes.

“July social financing, real estate, infrastructure and other data reflect the weak effective market demand and poor actual financing demand. The market has poor expectations for steel demand, which has a certain negative impact on the trend of iron ore.” Qiu Yuecheng told Reporter, in fact, the price of finished products has been weak since June, but the price of iron ore remained strong at that time and was obviously overestimated. As market sentiment reversed, the price fell inevitably.

Steel prices have medium and long-term support

Regarding the iron ore price outlook, Xie Xu believes that as long as there are no major risk events such as mining disasters on the supply side, iron ore supply and demand will tend to be loose in the second half of the year, high valuations will face repair pressure, and prices will be under long-term pressure.

Although the sharp drop in iron ore prices has freed up more room for the profitability of steel mills, the current surge in coke prices has created a new squeeze on the profitability of steel enterprises. According to data from Wenhua Finance and Economics, since July, the main coke futures contract on the Dalian Commodity Exchange has risen by 25.04%.

In the spot market, on August 23, the price of coke in Tangshan area realized the fifth round of increase in the month, and the price of secondary metallurgical coke reached 3,200 yuan/ton, an increase of 600 yuan/ton from the end of July. Shanxi and other mainstream regions started the sixth round of rising.

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Wang Guoqing, director of the Lange Steel Research Center, told a reporter from China Securities News that the import refineryCoking coalDecrease and increased domestic environmental protection restrictions have continued to restrict the release of coke production. In June and July, my country’s coke production fell by 3.2% and 2.9% year-on-year for two consecutive months. However, the recovery of the overseas economy has led to an increase in coke demand.

As an important raw material for steelmaking, the price increase of coke inevitably pushes up the production cost of steel enterprises.

According to the monitoring data of the Lange Steel Research Center, as of August 24, the Platts iron ore price index was US$148.6/ton, a decrease of US$31.9/ton or 17.7% from the end of July; the price of coke was 3,200 yuan/ton. An increase of 600 yuan/ton from the end of last month, an increase of 23.1%; driven by the increase in coke prices, the spot Langer pig iron cost index measured on August 24 was 173.4, an increase of 2.3 points or 1.3% from the end of July. “It can be seen that the increase in coke prices has seriously overdrawn the cost reduction space brought about by the decline in iron ore prices.” Wang Guoqing believes that it is difficult to effectively improve the import of coking coal in the short term, and the price of coke is still likely to rise further, which will lead to an increase in the cost of steel production. The shrinking of profit margins.

From an investment perspective, Xie Xu suggested that under the “dual-carbon” policy, the steel industry’s goal of reducing crude steel output will not change. Steel maintains more ideas on dips. (Source: China Securities Journal)

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