The fundamental reason for the price increase of iron ore is high demand. In recent years, China's economy has maintained rapid growth, which has led to the growth of steel demand, which in turn has led to the upward price of steel, which in turn has led to a substantial increase in profits of steel production enterprises, which in turn has stimulated steel enterprises to expand steel production and capacity, which in turn has led to the demand for iron ore. In addition, there are also reasons for the depreciation of the US dollar. Because the price of iron ore in the international market is priced in dollars, and the recent depreciation of the dollar is relatively large, which makes the import price of iron ore denominated in dollars rise. Considering the impact of floating exchange rate, the increase of CIF price of China iron ore denominated in US dollars is higher than that denominated in RMB, which reflects that the appreciation of RMB is beneficial to reduce the import cost of China iron ore.
Figure 39 CIF trend of domestic imported iron ore in 2006-2007
Analysis Report on the Situation of Land and Resources in 2007
The price increase of iron ore is beneficial to domestic iron mining enterprises and will greatly increase profits; For large steel enterprises producing high value-added steel products (such as Baosteel, WISCO, Angang and other large steel enterprises), the increase in iron ore prices pushes up the company's cost less than that of high value-added steel products, and the performance and profit are not affected much; For steel enterprises that produce low-end products, especially small steel enterprises (mainly producing low-end products such as wire rod and rebar), it is difficult to completely pass on the rising costs, and their performance and profits will be greatly affected. For downstream industries, especially automobile, machinery manufacturing, shipbuilding, light industry, household appliances and other industries, the price of their products is difficult to be transmitted downwards, and the profit space of these industries will be reduced.
Figure 40 Trends of international and domestic copper prices in 2006-2007
Analysis Report on the Situation of Land and Resources in 2007
Refining copper. Spot prices in nine major cities, such as Beijing, consolidated at a high level and fluctuated upward, with an average annual price of 62,535 yuan/ton, up 0.6 1% year-on-year. Internationally, the average spot price of the London Metal Exchange is 711USD/ton, up 5.8% year-on-year (Figure 40). The average domestic copper price was 18776 yuan/ton in 2003, 27798 yuan/ton in 2004, 35475 yuan/ton in 2005 and 62467 yuan/ton in 2006. 2007 and 2006 were basically the same, with an increase of 235% in five years.
The joint promotion of foreign and domestic factors has led to the rise of domestic copper prices. Internationally, the continuous depreciation of the US dollar has brought an overall bullish atmosphere to the international copper futures market, and the strike of copper mines in Mexico and Chile poses a potential threat to the market supply; There is a long-term shortage of domestic demand, and changes in the domestic stock market will also affect the market changes of copper futures and spot. There is a strong linkage between international copper prices and domestic copper prices.
The continuous rise of copper price has had a great positive or negative impact on all links of China copper industry chain. First, mining enterprises are profitable; Secondly, it drives the processing cost of copper concentrate to rise sharply, which makes the smelting process profitable, but it also leads to the blind expansion of copper smelting industry, and some large domestic enterprises have begun to become the agent processing bases of international copper mines and smelters in China; Third, copper consumer enterprises, including household appliances, building materials, electronics, machinery, light industry and other industries, are facing enormous operating pressure, but at the same time it also promotes the development of substitutes.
Figure 41international and domestic aluminum price trends in 2006 ~ 2007
Analysis Report on the Situation of Land and Resources in 2007
Refined aluminum. Spot prices in nine major cities, such as Beijing, adjusted at a high level and fluctuated downwards, with an annual average of 19833 yuan/ton, down 4.3% year-on-year. Internationally, the spot price of the London Metal Exchange averaged $2,627/ton, up 2.2% year-on-year (Figure 4 1). Domestic aluminum prices moved against the international trend, and the rising trend for four consecutive years began to stop falling and pick up. In particular, the average price of domestic A00 aluminum ingots was about 1 17470 yuan/ton on October 20th, which was the lowest level since 2006. However, compared with 2003 14765 yuan/ton, 2004 16370 yuan/ton and 2005 16964 yuan/ton, the price of aluminum in 2007 is still at a high level.
Since mid-May, the main reason for the continuous decline in aluminum prices is that the output of electrolytic aluminum continues to increase rapidly, and the relationship between supply and demand in the market tends to ease.
With the decline of aluminum price, the profits of electrolytic aluminum production enterprises, especially those enterprises that only rely on selling aluminum ingots and primary processing aluminum products, may be affected to some extent. However, for the whole aluminum industrial chain, it is conducive to further promoting electrolytic aluminum enterprises to speed up the adjustment of product structure according to the requirements of optimizing the industrial chain, shift the focus of industrial development from the expansion of production capacity to the extension of the industrial chain, take the road of product finishing and deep processing, and focus on developing high-value-added products such as high-precision aluminum plates and strips.
Figure 42 International and domestic gold price trends in 2006-2007
Analysis Report on the Situation of Land and Resources in 2007
Gold. The spot price of Shanghai Gold Exchange (Au99.95) opened higher and went higher, rising sharply, with an annual average of 170 yuan/gram, up 9.9% year-on-year. The international price averaged $695 per ounce, up 15% year on year (Figure 42). This is the fifth consecutive year that the price of gold has risen. Compared with 96.68 yuan/gram in 2003, the overall level has increased by 75.8% in five years. The price of gold has exceeded the historical high of 1980.
The rise of gold price in 2007 was not only influenced by the price trend of US dollar and crude oil, but also by the increasing desire of domestic residents to buy gold consumer goods, the increasing demand for gold consumption in high-tech industries and the increasing interest of investors in investing in gold.
With the high price of gold, gold mining companies have entered the boom cycle and benefited significantly. In addition, it also promotes gold exploration and mining. When gold is depressed, gold mining companies will give up low-grade ore, but for the current boom cycle, because all grades of ore can be profitable, gold mining companies will choose the largest scale of gold mining.