Serious excess capacity due to steel market, the long-term perspective, the price of steel by the decision of the marginal cost of production, which is decided by the price of ore, coke and scrap, of which the most important variable is the ore price. Ore market is also an excess of the market, the price of ore by the marginal cost of the decision. The marginal cost of the global ore to the Chinese and domestic ore decision, accounting for more than 30% of domestic mine production of the mine production costs 600 yuan / ton to 700 yuan / ton, converted into dry tax of about 800 yuan / ton to 900 yuan / t near the medium to long term, support the formation of steel prices.
China is the world's largest pig iron production, changes in China's iron ore market can be a valid description of the global iron ore market supply and demand situation. Since 2003, iron ore prices have been rising, especially in 2007 after the price jump up, the high profits to attract more and more people into the ore industry. Although the iron ore industry, long production cycle, large-scale foreign mining construction period is generally five to seven years, the small mines in China generally takes 1 year to 2 years, but counting from the ore prices rose rapidly in 2007 to 2012 has also been more than five years, a lot of new mines began to be put into use in 2012 to 2014, there will be more mines have been put into use. Seen in this light, the mining market will be more relaxed.
Since the second half of last year, the consumption growth of the iron ore market decline, the increase in supply growth into a surplus market. The global pig iron output in the first half of this year, year on year growth of 2.49 percent compared to last year the growth rate of 6.2 percent, down nearly 3.7 percent. At the same time, the world's iron ore production is on the rise. China's iron ore production in the first half of this year, an increase of 5.9 percent in 2011 annual output growth of 23.5 percent year on year. During the same period, the three mines in the first two quarters of production with the same period last year was essentially flat, but the overall capacity of the three mines has a 11.7% increase compared to 2011. Outside the mineral amount in addition to the three mines, there have been increased. Ore market surplus, port stocks have soared, prices rapidly declining.
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