China Business News reported that the world economic order is facing new severe challenges. In this context, it is even more important for iron ore trading to insist on long-term cooperation and mutual benefit.

The 18th China Iron and Steel Raw Materials International Conference hosted by the China Iron and Steel Association and the Metallurgical Industry Branch of the China Council for the Promotion of International Trade was held in Dalian a few days ago. The participating domestic and more than ten countries’ miners, experts, traders and business representatives Active discussions were conducted on further improving the iron ore market environment and doing a good job in iron ore trading.

As the world’s largest steel production and consumption market, China is also the world’s largest iron ore consumer market. It imports more than 60 billion U.S. dollars of iron ore each year. Eighty percent of global iron ore shipments are related to China. China’s iron ore trade It greatly determines the trend of world iron ore trade.

In order to promote the sustainable development of iron ore trade, since 2017, the China Iron and Steel Industry Association has reached a basic consensus on the basis of full communication and negotiation with well-known mines in the world. All parties rationally judge the changes in the situation and the relationship between supply and demand. A consensus was reached on improving the pricing mechanism and cooperation methods and useful attempts were made. With the joint efforts of both the supply and demand sides, the iron ore trade has performed better this year than in previous years, and the satisfaction of mines and steel mills has been improved.

"A stable market is needed by both the supply and demand sides. Only when the market is stable can stable production be arranged, stable income and stable expectations." Liu Zhenjiang, secretary general of the China Iron and Steel Association, pointed out at the meeting that iron ore trade in 2018 Good market order transfer parties have experienced firsthand the importance of a stable market, a good market environment and order to both supply and demand. "The supply and demand sides must take care of each other's interests, negotiate trade rules, jointly build a trade mechanism, and share trade results. Unfair unilateral priority is unsustainable."

So far, this year has been the most stable year for China's steel industry since the outbreak of the global financial crisis in 2008. After more than two years of overcapacity reduction, China's iron and steel industry has effectively solved the contradiction of serious overcapacity. Supply and demand have basically been balanced, and the industrial structure has been significantly optimized. In the first seven months of this year, China’s steel production and demand increased slightly. The country’s steel production was 533 million tons, an increase of 6.3% year-on-year. The increase was supplemented by the factor of withdrawal of “land steel”. Under the control of production capacity, domestic steel production And demand is basically in balance. While resolutely eliminating outdated and illegal production capacity, superior production capacity was released, corporate efficiency improved significantly, sales profit margin basically reached the average profit level of industrial enterprises above designated size in the country, and the industry's average asset-liability ratio fell by 4.1 percentage points. Benefiting from the improvement of the steel market order, the price of steel has remained within a reasonable range as a whole, the fluctuations in various economic indicators have been small, and the industry’s environmental protection governance, technological progress, corporate reform and management have been comprehensively strengthened, and continued to achieve high-quality development.

From the perspective of stages, China's steel production has shifted from a period of rapid growth to a period of relatively stable and less volatile peaks. Liu Zhenjiang pointed out that this phased plateau period of China's steel production will not be fleeting. Supported by the continuous development of market rigid demand, China's iron ore demand is also rigid and will not fluctuate greatly.

At the meeting, representatives of international mines such as Vale, Rio Tinto and BHP Billiton introduced the characteristics and future plans of their mines and iron ore products, and expressed their willingness to deepen long-term cooperation with Chinese steel companies.

As direct stakeholders, mines and steel mills have the desire and responsibility to jointly build a healthy iron ore market order. Regardless of the changes in the international situation, both parties should keep their minds sober and take measures and mentality for future market changes. Preparations and close cooperation to ensure the smooth operation of the iron ore market.

In this regard, Liu Zhenjiang suggested that the iron ore trade supply and demand parties should maintain multi-party and multi-level communication, form a communication system and mechanism, and negotiate trade rules based on the principle of high-level consensus, and properly handle and resolve the contract performance process in a risk-sharing manner Some details appear in the.

In terms of improving the iron ore pricing mechanism, since many domestic and foreign institutions have their own iron ore price indexes, the use of mixed index pricing can better reflect market fairness than single index pricing. This year, on the basis of consensus with various well-known mines, the use of mixed index pricing has been implemented, and the supply and demand parties can refuse to sign contracts that do not use mixed index pricing. Cooperating with the negotiation between the two parties on the long-term agreement price mechanism, settlement method, and contract period can promote the healthy development of the long-term agreement.

In the process of market development, a variety of new trade forms such as iron ore spot trading platforms and financial derivatives futures markets continue to appear. The spot trading platform has the advantages of high transparency and real trading. The futures market has the function of predicting trends, finding prices, stabilizing the market, and reducing risks. All parties in the market must actively participate in and use these market tools to increase the amount of spot trading platforms. And trading volume, enhance the activity of futures contracts, international development and facilitation of delivery, and give full play to the positive role of basis, options and other derivatives in the market. To

This article is transferred from China Coal Resources Network

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