Iron is widely used in our daily life, but China's iron ore reserves are very small and the quality is generally low, so most of China's iron ore depends on imports. According to big data, from June 1 to June 1 1 in 2020, China's iron ore imports reached10.07 billion tons, far exceeding the total imports last year. Because of this, a slight change in iron ore prices will have a great impact on the industry in iron and steel smelting, China. The most direct and fundamental thing is to increase production costs, thus reducing and weakening its profitability and level.
First, the subjective reason for the price increase of iron ore is not only iron ore, but also the contradiction between supply and demand. With the spread of COVID-19 epidemic around the world, all the four major iron ore production mines in Australia and other places have reduced production. As the main producing area of iron ore, Brazil also closed many iron ore production mines because of the epidemic. With the gradual recovery of production capacity in various regions of the world, the demand for iron ore is increasing, but the iron ore output has been repeatedly lowered and there is no clear plan to increase production. Under the contradiction between increasing demand and decreasing output, the price of iron ore is rising day by day. Compared with 500 yuan in September 2020, the price of one ton has risen to 700 yuan, with an increase of 40%.
Second, the objective reasons for the increase in iron ore prices The objective reasons for the increase in iron ore prices mainly lie in some domestic iron and steel smelting production enterprises. First, in June 2020, Tangshan proposed that some iron and steel enterprises with performance grade C should reduce production according to their regions and influences. This practice leads to an increase in steel prices, which indirectly pushes up the price of plateau material iron ore. Then, since the supply-side reform of China iron and steel industry, the smelting and energy-saving and emission-reduction equipment of some large steel mills have been greatly upgraded. However, with many new advanced production capacity put into use, the output of steel will inevitably increase sharply, and the demand for iron ore will also increase greatly.
In addition, it is also reported that the sharp rise in iron ore prices is also related to the monopoly of many foreign countries and speculation in the capital market. Overseas inflation has pushed up commodity prices. In addition, the spread and influence of COVID-19 epidemic in the world and the abnormal relationship between supply and demand, coupled with fermentation, led to a sharp rise in iron ore prices.