The rise in iron ore prices directly led to the rise in Hot Dip Galvanized Coil prices.
World iron ore exports are restricted.
China mainly imports iron ore from Australia, Brazil, and India. Affected by the epidemic, Brazil closed some of Vale's iron mines, resulting in a decline in exports. India restricts iron ore exports for its own reasons. China's iron ore supply market in Africa (South Africa, Guinea) is still insufficient. A combination of reasons has led to a shortage of global iron ore supply.
2. The international settlement price of iron ore is inflated.
This stems from the fact that the United States has implemented a "weak dollar" (manipulation of the dollar exchange rate) strategy in order to revitalize the export economy, which has contributed to the inflated increase in the international settlement price of iron ore. It should be understood that the price increase of iron ore is mainly due to the role of the "price lever" to adjust market supply and demand.
Who is Driving Iron Ore Prices?
The sharp rise in iron ore prices this year began with Brazil's Vale's disastrous dam failure earlier this year. Brazil's Vale is one of the world's top three iron ore suppliers. Together with Australia's BHP Billiton and Britain's Rio Tinto, it is known as the "Big Three Iron Ore," monopolizing most of the world's high-quality iron ore supply, accounting for more than 70% of shipments. Against such a background, the actions of the Big Three will soon be reflected in the market, especially the iron ore futures market, which is the prophet of spring plumbing. After Vale's accident at that time, the market generally expected that the supply of high-quality iron ore in the international market would inevitably decrease, but the demand showed no signs of slowing down.
3. Reasons for domestic iron ore price rise this year
1). Due to well-known reasons, the amount of iron ore arriving at the port has decreased, while the demand for domestic steel products has been strong, and the contradiction between supply and demand has widened further.
2). As the Fed releases water, commodity prices rise. In fact, not only iron ore but also some other resource varieties have reached historical highs in recent years.
3). The market is filled with bullish sentiment. Whether it is for hedging or speculation, it has given birth to the "strong and continuous strength" on the disk. Especially if foreign investors make a lot of money, you can look at the seat position of JPMorgan Chase.
