Iron ore industry Research Report: Lonely at the top

According to the previous analysis, the growth rate of global iron ore production in 2022 is 3.2%, and the growth rate of demand is only 0.8%, and the supply and demand are weakening, and the price is expected to fall.

Under the background of carbon peak and "to produce", iron ore prices are expected to fall. According to the statistics of Wind and the National Bureau of Statistics, the MyIpic iron ore comprehensive price index has a strong correlation with the cumulative domestic pig iron production, and under the background of carbon peak and "to production", iron ore prices are expected to follow the year-on-year growth rate of pig iron production.

Port inventory has been close to the central level, iron ore port opening began to decline at a high level. According to Wind data, as of May 7, 2021, iron ore inventories at domestic ports were nearly 130 million tons, which has risen to more than 20 million tons from the inventory low in June 2020. In addition, the average daily volume of iron ore thinning at 45 ports has also begun to gradually decline, indicating that iron ore demand is weakening at the margin under the background of high ore prices and marginal decline in production growth.

China's iron ore is marginal production capacity, supply and demand is still a tight balance of iron ore price support. According to the WESTERN AUSTRALIA IRON ORE PROFILE - March 2021 released by the Government of Western Australia and USGS statistics, 80% and 90% of the global iron ore cost curve are concentrated around the Chinese iron ore cost level, with China CFR cash cost of $82.8 / ton in 2020 and full cost or nearly $100 / ton. In the context of "carbon peak" and "production" in the steel industry, the price of iron ore in 2022 will drop to $100 / ton, and the cost of iron ore such as China and Canada is its price support.

In summary, the margin of global iron ore supply and demand pattern or will weaken, and mine prices are expected to fall from a high level. Under the policy background of "carbon peak and carbon neutrality" in the steel industry, the profit distribution of the upper, middle and lower reaches of steel has been extremely distorted or will be reshaped, and the profits of the midstream steel smelting and downstream manufacturing industries are expected to be maintained and improved.