In 2016, the commodity market has experienced the melting of ice and fire, after several rounds of adjustment of iron ore spot and futures prices are not afraid of the demand side of the dispute on a strong upward, so the market continued until the spring of 2017. Affected by the Hong Kong stocks listed company CITIC shares (00267.HK) on the evening of February 15th announced the provision of impairment provision for the Australian iron ore project 800 million -10 billion U.S. dollars (after tax), compared with the previous year narrowed sharply.
CITIC shares, said an important indicator is based on the market for iron ore prices on the forecast. Although the price of iron ore is still strong, but the market for the future trend of iron ore there are still different views, CITIC shares in the announcement carefully said: "although the iron ore spot prices rose recently, but independent institutions are lowered the long-term forecast price."
Australia iron ore impairment provision narrowed
The Sino Iron Project Investment "bottomless pit", 2014, CITIC shares made 1 billion 400 million -18 billion provision for impairment of Australian iron ore, the provision for impairment of $1 billion 500 million in 2015 to $1 billion 700 million (after tax), every year affects the overall profitability of company.
CITIC shares announced that the last line in the six Australian iron ore production in May last year to enter the commissioning. In 2016, the project produced a total of about 11 million tons of wet concentrate powder. Next, the focus of the project will continue to increase production, improve efficiency, reduce operating costs, etc..
CITIC shares formerly CITIC Pacific, completed in July 2014 by the parent company CITIC Group to absorb the merger and equity financing, the overall listing, thus renamed. CITIC Pacific has been a pivotal infrastructure and property investors in Hongkong, affiliated with the red capitalists Rong Yiren founded the financial conglomerate group CITIC group. Its business in China and overseas covers finance, resources and energy, manufacturing, engineering contracting, real estate and other fields. At present, China CITIC Group Co., Ltd. holds 58%.
In 2006, "Chinese demand" global pushed iron ore prices rising for three consecutive years, the son of Rong Yiren, when he was chairman of CITIC Pacific Larry Yung Chi Kin in the then super boom into Australia battlefield unfamiliar, wholly buy Australia iron ore. At that time the iron ore import price of about $60 per ton. According to the original plan, CITIC Pacific invested $about 3000000000 in the first half of 2009 put into operation. This was the largest overseas investment in China's mining industry.
On 2008 due to a large number of Australian dollars and the huge loss of investment derivatives of CITIC Pacific, Australia seven years of bitter mining the most profound impact history, not the total investment by $about 3000000000 soared to more than 2 times, but the breakeven point is: since the beginning of 2012, the global iron ore market to boom cycle, high cost suppliers increased pressure.
However, in the spring of 2016 market turnaround. In the global economic situation is grim, 2016 Chinese steady growth policies continue to overweight, in 2016 the government work report also increased the bulk of the Bulls confidence, "asset shortage" under the background of black lead was detonated rise, the entire commodity bull market staged joint.
Although regulators repeatedly shot to prevent the risk of cooling, but since 2017, the overall price of iron ore spot and futures prices up. As of February 14th, the delivery of iron ore spot in Qingdao port reported $92.23 / ton, the highest price since August 2014, futures prices were more than 700 yuan / ton, breaking the high since July 2014.
Iron ore prices go?
Demand rebound is still considered to be the introduction of the current round of iron ore market. Analysis of the mechanism of Minelife founding director GavinWendt said citing Caixin, from the beginning of 2017, BHP, Rio Tinto iron ore production giants provides a large number of iron ore supply, but the supply is nearly equal Chinese market absorption, China demand on the market formed a strong support, iron ore prices are expected in the first half of 2017 will remain relatively stable trend.
The world's second largest mineral company chief financial officer Chris Lynch (ChrisLynch) said in February 14th that the Chinese economy remains strong, high grade ore demand overall should be guaranteed, so the iron ore price fell sharply situation. "However, the peak of China's iron ore demand has been in the past, the long-term decline in demand in China is inevitable. Trump Gee, the United States may launch large-scale fiscal stimulus measures, or this will become the new point of Rio Tinto's performance".
According to the latest disclosure of China's industrial producer price index (PPI) data in January 2017 rose 0.8% mom, an increase of 6.9%. National Bureau of statistics city division Senior Statistician Sheng Guoqing said, ferrous metal smelting and rolling processing, coal mining and washing, non-ferrous metal smelting and rolling processing industry prices rose 2.1%, respectively, and 1.7% and 0.1%.
Changjiang Securities Industry Analyst Wang Hetao believes that after the Spring Festival is still in the off-season, the terminal demand is not clear, but did not move, heart streamers move first, the current market for the real short-term demand optimistic expectations, which saw black futures gradually repaired into premium premium, recently black futures rose, further widening the premium rate futures trader. Link inventory also accumulated in the price environment.
Hua Wen futures research and Development Department released the latest report also pointed out that, after the Spring Festival steel terminal did not completely start, the influence factors of infrastructure investment projects landing and environmental governance, the market is optimistic about the iron ore market outlook is expected, the middleman stockpile actively, later will test the demand for the release dynamics and inventory digestion.