Trend of pig iron price in 2008

In recent years, serious coal mine collapse accidents have caused hundreds of millions of losses to China's economy. In 2007, China began to intensify the rectification of coal mines and small coal mines. At present, there are a large number of substandard coal mines and small coal mines in China. The decrease of coking coal supply makes its price rise continuously, which drives the price of coke to rise and directly affects the production cost of iron works. In addition, although the domestic ore transaction was light at the end of the year under the influence of passive procurement of iron works, after the negotiation of importing long-term agreement ore, the manufacturers were very optimistic about the market and thought that it was only a matter of time before the domestic ore price rose. Affected by two factors, the highest ex-factory price of domestic steelmaking pig iron at the end of the year is about 4000 yuan/ton. Although there is no support from downstream products, there is no scene of falling prices and harmonious transactions. After all, the iron factory has been hovering on the cost line and has no choice but to stop production. The firm price of steelmaking pig iron has become a strong support for the rise of scrap steel. At present, the gap between the average price of domestic scrap steel and the average price of pig iron is about 450 yuan/ton (excluding 200 yuan/ton scrap steel due to production process), which will support the domestic scrap price to continue to rise steadily in 2008.

Figure 1

As can be seen from Figure 1, the price of scrap iron in Shandong Province of China has been rising all the way since 2007. Although the pig iron in steelmaking once fell back in the third quarter, it did not affect its general trend. Driven by the rising price of pig iron in steelmaking, the price of scrap iron is also rising steadily. Of course, the rise of steelmaking pig iron is only one of its influencing factors.

Third, the impact of reduced steel exports on the domestic scrap market.

Affected by the export tax increase policy, China's steel exports were difficult to grow in 2008, and China's influence on the international steel market trend was greatly weakened. If the change of steel market trend in China from June to July in 2007 affected the international market, the actual trend of international steel market in 2008 based on the relationship between supply and demand will affect the steel market in China. After 2008, the trend of steel market at home and abroad is likely to fall back rationally. However, if the international steel market continues to increase in price due to the decrease of China's exports, the export volume may rebound if it exceeds the expected profit margin. Although the range will not be great, the production demand at home and abroad in 2008 is enough to cause the shortage of steelmaking raw material resources.

Four, the influence of other auxiliary factors on the domestic scrap market

The overall increase in the prices of scrap steel and pig iron has increased the cost of steel mills. Some steel mills have begun to consider using sponge iron for smelting. The technological process of sponge iron is to mix coal and water into coal water slurry with a certain concentration, and the coal water slurry is gasified under pressure to generate synthesis gas. Gas purification process is used to remove hydrogen sulfide and carbon dioxide from synthesis gas to obtain reducing gas with carbon monoxide and hydrogen as main components. After heating to a predetermined temperature, it is introduced into a shaft furnace, and the reducing gas reduces the iron ore into sponge iron. However, it is understood that it is difficult to transport and store sponge iron due to its physical properties. There are not many steel mills that use sponge iron at present.

At present, China's coal reserves have begun to shrink at the rate of 654.38+10,000 tons per day, which directly affects the power supply and rising costs and prices.

Based on the above analysis, the scrap market in China is affected by weather, power cut, supply and demand. According to United Metal Network, in 2008, the scrap market in China will maintain a steady upward trend, and it is very likely that there will be regional large-scale changes due to the increase in purchase prices of individual steel mills.

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(Editor: ljj)

Last updated: February 2008-1017: 36

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