China's iron ore spot trading platform will be officially launched, which is the result of the game between the parties, but also the beginning, but changed the battlefield. On March 29, 2012, China's iron ore spot trading platform began to simulate operation. This is only half a year since the China Iron and Steel Industry Association (hereinafter referred to as China Steel Association) launched the China Iron Ore Price Index in October 2011. Prior to this, on January 16, the China Iron Ore Spot Trading Platform was jointly initiated by China Steel Association, China Minmetals Chemicals Import and Export Chamber of Commerce, and Beijing International Mining Rights Exchange (hereinafter referred to as the North Mine). The iron ore entity transaction will be officially launched on May 8. In the iron ore negotiation table in recent years, Chinese steel companies have suffered enough. At the moment when the supply and demand of iron ore has reversed, the operation of China's iron ore spot trading platform is in full swing with little speed and rhythm. The establishment of an iron ore spot trading platform is an action by the Chinese steel industry to actively promote the formation of a fair and transparent international iron ore price formation mechanism and compete for market discourse power. The battle for pricing power According to the data released by the China Iron and Steel Association, in the past few years, China's iron ore trade accounted for about 60% of the global trade market share, and is the world's largest iron ore importer and spot market. Due to the strong domestic demand in China, iron ore prices have risen sharply in the past few years. The price of imported iron ore from 2000 was about 20-30 US dollars per ton. It was arrogant and the highest approach was 200 US dollars per ton. Iron ore was once Known as the "crazy stone", the price has doubled continuously, and Chinese steel companies have to pay hundreds of billions of dollars each year to mine companies. In order to reverse this passive situation, Chinese steel companies have been trying to increase their discourse power in iron ore pricing through negotiations and increasing domestic industrial concentration. However, because the three major miners of the upstream iron ore control more than 60% of the global iron ore trading volume, and firmly control the right to speak of iron ore pricing, Chinese steel enterprises can only respond passively, and supportlessly become unsuccessful. Three major miners' cash machines. Since the beginning of the 1980s, the negotiations between major iron ore suppliers and steel giants have formed a long price. In 2009, China Steel Association went from behind the scenes to the front of the stage and directly negotiated iron ore. This time, the negotiation requirements of the China Iron and Steel Association were also rejected by the iron ore miners. Since 2010, the Changxie Mine, which was discussed every year, has been completely abandoned by the three giants of iron ore miners. The Big Three are more likely to control and operate iron ore prices in order to obtain greater profits, and advocate and strive to implement more short-term. Quarterly pricing, monthly pricing and spot pricing mechanisms, and even monthly pricing trade accounted for about 70%, the target is directed at indexed pricing. Since 2011, upstream miners such as BHP Billiton and other international miners are planning to launch a spot trading platform for iron ore, Singapore's global iron ore spot trading platform, in order to firmly control iron ore pricing rights in their hands. BHP Billiton has also been lobbying Chinese steel companies and steel trading companies to join Singapore's global iron ore spot trading platform in Singapore. On the one hand, BHP Billiton is actively preparing to build a Chinese iron ore spot trading platform. On the other hand, it has tightened its own fence and warned member steel companies to communicate and communicate with them, but do not sign an agreement. China Steel's cooperation with China's iron ore spot trading platform has received much public attention since the early stage of preparation, especially as the number of important ore companies that the platform can attract to become a focus. Under Zhang Luo of China Steel Association, including 13 large steel enterprises such as Baosteel, Anshan Iron and Steel, Wuhan Iron and Steel, Shougang and Hebei Iron and Steel, and 13 large-scale steel trading enterprises such as Minmetals Group, Sinosteel Group and Sinochem International , a total of 26 China Initiating member of the iron ore spot trading platform. Obviously, the iron ore spot trading platform is still wishful thinking without the participation of iron ore miners. Relevant persons of China Steel Association have always said, “Welcome to the global iron ore merchants to join the Chinese iron ore spot trading platform, as an ordinary member can also participate, as a shareholder can also participate, but as a shareholder, we require it to have a certain industry The influence, scale and credibility of the company.†The China Iron and Steel Association has repeatedly issued a briefing, and the three major miners of iron ore are very interested in the platform and will participate soon. The confidence of China Steel Association comes from the reversal of the relationship between supply and demand in the market. From the perspective of domestic demand, the major steel industries such as machinery, automobiles, ships and railways will face a slowdown after the rapid growth in the past few years. At the same time, the real estates under this year’s macroeconomic regulation and control will face greater uncertainty. In addition, the pressure on steel companies to lose money will inevitably reduce steel production, and demand for iron ore will also fall. From a supply perspective, the monopoly status of the three major mines is constantly being challenged. First, China's domestic iron ore supply capacity continues to increase. In 2011, the output of iron ore raw ore was 1,32694 million tons, an increase of 283.36 million tons from 2010, which can all meet the incremental demand for domestic pig iron. Second, the global iron ore supply capacity is greatly increased. Strengthening, with the gradual commissioning of global projects under construction in 2012, the supply capacity of iron ore will be further improved; third, the trend of low-speed growth of steel production at home and abroad is obvious; fourth, the deposits of mines in China have reached more than 100 million tons. Zhang Changfu, vice president of China Steel Association, said: "These signs indicate that the global iron ore supply situation has been formed. Compared with the low cost of iron ore, the price of minerals should have a large room for decline." According to the China Iron and Steel Association announced Data, since the second half of 2011, the overall profit margin of China's steel industry has declined. In January this year, this indicator fell to -0.89%, and has fallen into a loss-making state. According to the latest statistics from the Bureau of Statistics, China's crude steel output in January-February was 112.6 million tons, up only 2.2% year-on-year. Under this circumstance, the attitude of the three giants of international iron ore miners who have always been confident in "China's demand" has quietly changed. BHP Billiton, one of the Big Three, has expressed concern that China's economy is undergoing transformation and steel demand will stop growing. BHP Billiton also predicts that China's iron ore demand growth rate will drop to single digits, and as early as the second half of last year, another mining giant Rio Tinto issued a voice warning that China's iron ore demand growth is slowing. FMG quickly sent , China's iron ore trading platform turned around, the world's fourth largest iron ore producer FMG took the lead in giving. On March 20th, FMG and Beijing International Mining Rights Exchange held a signing ceremony for the entry agreement. FMG officially became a member of the China Iron Ore Spot Trading Platform. The addition of FMG to China's iron ore spot trading platform means that the four major iron ore giants "the alliance" is gradually breaking down. In fact, FMG's first move is not as simple as it seems. In July 2009, in the iron ore pricing negotiations led by the China Iron and Steel Association, the three major miners were tough and unwilling to agree to the negotiation requirements of the China Iron and Steel Association. It was FMG who stood up and took the lead in signing with the China Iron and Steel Association. A unified price that has fallen sharply from the price of iron ore in the previous year. Compared to the three major miners, FMG is just a rising star in the iron ore field. The company has ambitiously developed a large-scale capacity expansion, and plans to make a big step forward in 2013 with a capacity of 155 million tons, and now the company's production in 2011. It is 55 million tons. “FMG's mineral grades are in the middle and lower grades, with iron content ranging from 56% to 59%. According to the ratio of Chinese steel mills, general steel mills can only use up to 30% of this ore, plus the next few years. There is a trend of oversupply in global iron ore production capacity, so FMG needs to develop customers through this platform.†An industry insider analyzed. In fiscal 2011, the revenue generated by the Chinese market accounted for 96.84% of FMG's total revenue. The importance of the Chinese market to FMG is self-evident. Compared with the three major miners, this time in the industry is regarded as the time when the ore sales are not good, FMG hopes to hold as many customers as possible, win the market for the later expansion, and achieve the overtaking of the curve. With the addition of FMG, the Chinese iron ore trading platform is ushered in a bright future, and the future is bright. Watching the Vale On March 29, the North Mine and Brazil's Vale signed a memorandum in Singapore, Vale Global Market Director Claudio Elvis and North Mines President Dong Chaobin signed on behalf of the two sides. It is worth noting that unlike FMG becoming a platform member, Vale has only signed a memorandum with the North Mine. According to the iron ore trading rules, it is necessary to formally become a member to participate in the transaction. The attitude of the Vale is obvious. According to the data, in the world's iron ore nearly 1 billion tons of annual seaborne exports, the company's supply accounted for more than a quarter. Vale has been hoping that its 400,000-ton bulk carrier will be able to dock at Chinese ports and establish a distribution center in China, but in early February, the Ministry of Transport of China issued the “Notice on Adjusting the Over-design Specification for Vessels' Berthing Managementâ€. The “one boat and one discussion†of the new large ship berthing in Vale was cancelled, and its huge wheel plan was blocked. Vale “supports†China’s iron ore spot trading platform, a statement that is quite different from the previous FMG’s “official signing and becoming a memberâ€. On the one hand, Vale is watching the progress of China's iron ore spot trading platform, and on the other hand, watching China's steel demand peak season. However, in the implementation of its huge ship program, Vale is not willing to offend the Chinese side, and does not want to give up the Chinese market. On April 17, Vale finally signed a contract with the North Mine and became a member. BHP Billiton signed a memorandum in Vale and North Mine to support the Chinese iron ore spot trading platform the next day. On March 30, Rio Tinto, another giant of the three major iron ore producers, officially traded with Beijing International Mineral Rights. Signed and became a founding member of China's iron ore spot trading platform. At this point, the world's three major iron ore miners are worse than BHP. BHP Billiton took the lead in the process of changing the iron ore long-term agreement price model to the index-based quarterly pricing and monthly pricing and spot pricing mechanisms. The international three major iron ore indexes, such as the Platts Index, TSI Index and MB Index, are also strongly promoted by BHP Billiton. The Platts Index has become the reference standard for identification. Although the Platts Index is widely criticized by domestic steel companies: The data was collected by telephone inquiry, and the opacity of the operation increased the fluctuation of iron ore price. The preparation of Singapore's global iron ore spot trading platform, BHP Billiton is an important driving force behind the scenes. It hopes to form an iron ore index based on spot trading, and finally its iron ore indexization and financialization. . Since November last year, BHP Billiton has already begun to visit major steel mills and large steel trade enterprises in China. It is hoped that domestic enterprises can join this platform in the form of shareholders. However, this lobbying action was blocked by the China Steel Association. On the one hand, China Steel Association accelerated the construction of China's iron ore spot trading platform. On the other hand, China Steel Association asked its members not to join the Singapore Global Iron Ore Spot Trading Platform. . This clear signal has indeed broken the confidence of BHP Billiton's wishful thinking. Without the participation of Chinese steel mills, the iron ore spot trading platform being built in Singapore will face the risk of “corneringâ€. In the face of the smooth development of China's iron ore trading platform, BHP Billiton played a “two-faced partyâ€. According to the Chinese public relations company, “BHP Billiton has consistently supported the initiative to increase the pricing transparency of the iron ore spot market and a key step to increase price transparency. It is the launch of the spot trading platform. We are very pleased that our major Chinese customers and China Steel Association agree to increase the transparency of iron ore prices and actively support the development of the spot trading platform.†On April 19th, BHP Billiton finally stopped. Signing up to become a member. The game is far from over. In addition to the three major mines, some mining companies from Chile, Mexico and Iran have also expressed strong interest in the Chinese iron ore spot trading platform, and have begun to consult and contact. In China, among the initiators of the China Iron Ore Spot Trading Platform, domestic iron ore enterprises and small and medium-sized ore traders have not appeared. Relying on the strong appeal of the Chinese market, China's iron ore spot trading platform has a slight advantage. But this is only the beginning. The establishment of the iron ore spot trading platform means that the further transparency of the ore trading can bring benefits such as cost increase efficiency. However, this new trading model is actually facing the challenge of the traditional trading model. “The price negotiated between the steel mill and the mine is not the price formula of the iron ore index. The mine often gives the steel mill various preferential and special price policies, which is actually the embodiment of the competitiveness of the steel mills. The relevant personnel still have a lot of rent-seeking space, so the steel mills may not be willing to use the mode of the spot trading platform to fully transparent operation.†An industry professional analyzed, “the iron ore spot trading platform is relatively traditional iron ore. In terms of spot trade, it is more complicated because of the need to increase the freezing margin and settlement, and it is difficult for steel mills to maintain long-term customer relationships through this platform.†In addition to the diversity of trading entities, the volume of trading actually determines the amount of trading. Can the platform have tangible market influence? “Even if major companies including the three major mines have joined, the amount of resources that can be placed on this platform is still unknown.†An ore industry insider who did not want to be named claimed that “if supply and demand reoccur Reversal, the three major iron ore miners can still control the price through the amount of iron ore placed on the spot platform, then the actual significance of the price discovery of the spot platform is also discounted.†In fact, for the iron ore giant, join China's iron ore spot trading platform does not mean compromise and failure. What the three major iron ore miners really care about is not where the iron ore spot trading platform is built, but the decision to form an iron ore price mechanism. The China Steel Association's intention is also very obvious. China's iron ore spot trading platform first attracts supply and demand parties to join, first develop into a trading center, and then seek pricing power.
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