Ordinary ore grade decline in Yunnan

According to Wang Xiaoqi, vice president of the China Iron and Steel Industry Association, the total loss of the domestic steel industry in the first quarter of 2014 was 2.3 billion yuan, of which the main steel industry suffered a loss of 4.1 billion yuan. According to industry sources, the overall loss means that the steel industry has entered a severe winter and a group of steel mills will withdraw from the industry in the future.

Affected by the losses in the steel industry, the sales radius of the iron ore primary pellets of Yuxi Hongshan pellet industry and trade limited liability company (hereinafter referred to as “Hongshan pellet industry and trade”) has continuously narrowed, and it has even reached the front door. If Hongshan pellet industry and trade face only adjustment of business strategy, Yuxi Xianfu Iron & Steel (Group) Co., Ltd. (hereinafter referred to as “Xianfu Steel”) is facing the test of continuous development. The game with iron ore is one of them. The main part.

Xianfu Iron and Steel is located in Xinping, which claims to have half of Yunnan's iron ore, but over 60% of them are outsourced. The savings of tens of millions of self-sufficient costs are the sources that can bring them further development.

Recently, the China Metallurgical and Mining Enterprises Association's group** Yang Jiasheng predicted that iron ore prices will enter a downward path in 2014. However, the expected low price of steel companies will not become a reality in the short term. However, there are also many people in the industry who believe that the problem of insufficient domestic supply capacity will always exist, and the amount of imported ore will continue to increase, especially for high-quality mines.

From the first quarter of 2013, the spot price of iron ore began to fall sharply, and it fell by 30% in early April this year.

The narrowing of profits: The sales radius of the pellets keeps shrinking. The pellets, a primary product of iron ore, and one of the charge materials for iron and steel smelting, account for no more than 25% of the iron and steel production charge. To a certain extent, its market trend can be directly used as a wind vane for the iron ore market.

Hongshan Pellet Industry & Trade is the only company in the steel and iron industry under Yuntong Copper to process pellets of iron ore associated with the Hongshan Copper Mine in Xinping.

The pellet footprint of Hongshan Pellet Industry and Trade has been to steel plants in Guizhou and Sichuan near Yunnan. "But with the slump in the steel industry and the continuous decline in the price of iron ore, the sales radius has almost narrowed to the doorstep of the home." Qian Hongzhu, director of the marketing and marketing department of Hongshan pellets, said, "The main suppliers in the province are Qujing and Yuxi. Some of the steel mills."

After the steel industry fell into the cold winter, the price of iron ore began to falter. Starting from the first quarter of 2013, the spot price of iron ore began to drop sharply, reaching a drop of 30% at the beginning of April this year and reaching the cost of domestic small and medium-sized mines. On March 21st, 62% of the price of Indian ore fines in Qingdao port fell to 700 yuan/ton, which was the same as the lowest price in early November 2009.

Qian pointed out that from the situation since 2009, 700 yuan / ton can be seen as the bottom of the iron ore market, each time to 700 yuan / ton near the market will quickly rebound. Judging from the current market and the data of major ports, it has already started rising.

Today, Hongshan pellets industry and trade pellets price of more than 1,000 yuan per ton, their grades are based on 60% as the standard pricing, the processing cost is more than 200 yuan per ton, to calculate the six or seven hundred ore mining fee The profit margin has been squeezed very narrowly.

In 2007 and 2008, subject to the country’s economic situation and macro-control, it was completely another scene. At that time, the price of a ton of pellets was more than 1,300 yuan. Because there was enough profit, in order to develop a market like Sichuan Panzhihua, Hongshan pellet industry and trade also never regret the freight of more than 140 yuan per ton.

"The main reason for directly boosting the formation of such a situation was the high price of steel. The price of the ordinary high line was more than 6,000 yuan, but the current online price of the ordinary high line was about 3,500 yuan per ton, and the factory's ex-factory price was About RMB 3,200.” Director Qian continued, “Although the steel market is sluggish, the cost of picking at the raw material end has not been reduced. Now we are facing a situation where raw material prices are high and the finished product price is low.”

Today, Hongshan pellet industry and trade has begun to adjust in the market, and began to gradually recover to Yuxi area. As far as Yuxi is concerned, the issue of the vacancy rate of trucks depends on the issue of pellets sent to Qujing and can be returned to coke; sent to the Red River, cement can be pulled back. This also reduces transportation costs.

Both Mr. Qian and the deputy general manager of Yuxi Xianfu Iron & Steel (Group) Co., Ltd. (hereinafter referred to as “Xianfu Iron and Steel”) Li believe that since the two are almost blind, the main trading partners of Hongshan pellet industry and trade should It is Xian Fu Steel. In fact, in Xianfu Iron & Steel's annual self-supplied mine of around 1 million tons, Hongshan pellets supply hundreds of thousands of tons, and its production capacity in recent years is about 800,000 tons.

Xinping Iron Mine: Each year, only a small amount of Yuxi Xinping County can be left in the area. It is not only famous for its style but also the proven reserves of iron ore that occupy half the province's entire province. According to Gao Hua, chief of industry and technology innovation unit of Xinping County Industrial and Commercial Information and Technology Information Bureau of Yuxi City, the iron ore of Xinping County is mainly concentrated in the Lukuishan mining area of ​​Yangwu Town and the Dahongshan Mining Area of ​​Fengshun Town, and the total amount is proved. The iron ore reserves are more than 500 million tons, accounting for more than half of the provinces in Yunnan Province, of which the Dahongshan mining area of ​​the Guashao Town has a total volume of more than 470 million tons.

The driver accompanying the reporter once asked on the road that, according to common sense, in the county that claims to have half of the proven reserves of iron ore in Yunnan, there must be a continuous flow of vehicles carrying iron ore. At the entrance of Dafumen Xianfu Iron and Steel Co., Ltd. in Yangwu Town, Xinping County, the reporter saw 10 vehicles coming and going from the steel mill and the Lukui Mountain mine.

According to Gao Hua, the Dahongshan Iron Mine, which possesses absolutely the largest iron ore in Xinping County, is transported directly from the pipeline to the quiet Kunming Steel. The world's largest pressure pipeline in this long-distance slurry transmission pipeline pipeline transports four or five million tons of iron ore concentrate directly to Kunming Steel's production workshop in the form of pulp.

This mode of transport has hardly contributed to the economic development of Xinping County. It seems that the direct effects of Dahongshan Iron Mine on the local economy are also minimal. According to Gao Hua, the Xinping County government is coordinating each year and it is possible to keep some of the iron ore concentrate in the Dahongshan mining area in the area, but the final result is still less than 100,000 tons.

Compared with the Dahongshan mining area, the Lukui Mountain mining area that provides iron ore directly to Xianfu appears to be insignificant. After many years of exploitation, the volume of production has been further reduced. Xian Fu Steel's approved annual production capacity is 2 million tons. The annual amount of raw ore is 2.6 million tons, while the amount of self-sufficiency in the local area is only about 1 million tons.

According to Li, the 1 million tons is mainly derived from the Dahongshan mining area (Note: The Dahongshan mine is divided into copper mines mined by Yuntong company and iron ore mined by Kunming iron and steel company) copper mines. Associated iron ore and the Lukui mountain mining area.

Xianfu Steel was developed on the basis of the acquisition of the Ruqui Group iron ore and steel company, and now most of the mining sites in the Lukui Mountain mining area directly provide mineral materials for them. Lee said that since the mining of the Lukui Mountain mining area started in the 1980s, almost all of them are underground, and the amount of exploitation is hundreds of thousands of tons per year.

As with other resources, Xinping's iron ore resources are also facing a declining situation. Some mining companies started to select low-grade iron ore four or five years ago. Gao Hua said that at present, the grades of iron ore mined by Kunming Iron and Steel Co., Ltd. and Xianfu Steel are mostly above 30%, and for some mining enterprises, iron ore with a grade of 17% will not be abandoned. And even lower ones cannot be carried out.

Among the private steel mills in Yunnan, Xianfu Steel is located in the top three, but under the background of half of Yunnan's iron ore, it is still necessary to go out and purchase more than 60% of the mine, among which is the reason why the subway ore is monopolized. There are Jinghong and other places in these exotic minerals, and there are farther places such as Panzhihua and even more distant Brazil.

Having a local mine: One of the core competencies of the existing steel plant In the 1984 second issue of “Kunming Institute of Technology”, there was a manuscript titled “Exploration of the Use of Iron Ore in Yunnan”, which states: “At present, with the exception of Kunming Steel, Most of the other mines are still under development and use.” That is, during that era, Yunnan carried out vigorous exploration of geology and mineral resources. Dahongshan Iron Mine was also the product of exploration during that period.

In accordance with the minerals, some steel plants with a national background were born one after another. By the beginning of this century, some state-owned steel plants in Yunnan Province were successively acquired and transformed into private steel mills, among which Chuxiong Desheng Steel Co. Yuxi Xianfu Steel and so on.

From Li’s point of view, whenever steel mills own local mines, they can continue to develop. However, like other industries, state-owned monopoly groups such as Kunming Steel have already completed Yunnan's better mines, but fortunately, at the beginning of the acquisition, the Lukui Mountain mining area was incorporated into Xian Fu Steel.

According to Li’s reflection, the market in Yunnan is somewhat special. The price of iron ore of the same grade compared with the import price of the coastal ports is higher by more than 100 yuan per ton, while the self-sufficient iron ore of Xianfu can be in the hundreds of thousands of tons per year. As soon as one year is discounted, it can balance tens of millions of dollars.

Yunnan iron ore is so priced because of the cost of long-distance transportation. In 2013, Xian Fu Steel purchased 300,000 tons of Brazilian ore with a grade of 65% from Fangchenggang, Guangxi, and shipped it to the factory site. The freight per ton is 280 yuan.

According to preliminary calculations, there will still be greater profit margins with local mines. Lee immediately added that from the charge point of view, the most appropriate refinery grade is about 50%, while Yunnan iron ore grade is relatively low, can only use high-grade iron ore to enhance the overall grade.

The reason why Xianfu Iron and Steel has carefully calculated the cost of iron ore lies in the sluggish environment of the steel market. As the impact of the national stimulus in 2008 subsided, starting in the second half of 2011, the steel industry has entered a trough that has not yet reached the bottom.

In 2013, domestic steel prices decreased by 8.5% year-on-year. In March 2014, the domestic steel industry's PMI index was 44.2%, which was a 4.3% increase from the previous period, and it rose for the first time after three consecutive months of decline. However, it has been below the 50% line for seven consecutive months, which indicates that the steel in the first quarter The overall situation in the industry is relatively low. In the first quarter, prices of the three major domestic rebar, hot-rolled and cold-rolled products dropped by more than 10% year-on-year.

Li said: "The market price of rebar should be around RMB 4,000 per ton, and steel mills can have a good living environment, but now they have been approaching the cost price." And now the price per ton of rebar in Kunming market Has been below 3,800 yuan for a long time.

In the charge, not only the price of Yunnan native ore is higher than the country, but the price of coke is almost the highest in the country, more than 400 yuan per ton. The reason for this is on the one hand because of the long distance to be transported, and on the other hand, secondary coke that can be used for smelting in Yunnan where the scarcity of ash is used. The fixed carbon content of domestic secondary coke is more than 85%, and the fixed carbon content of Yunnan is also 80%.

The original annual production capacity of Xianfu Steel was 2 million tons, which is almost 1/15 of Yunnan Steel's annual production capacity. However, the annual production capacity in 2013 was only over 1 million tons. “From a provincewide perspective, Yunnan has an annual approved capacity of 30 million tons, but the actual steel production capacity is less than 20 million tons per year.” Li said frankly that in the current form, it has passed the stage of relying on quantity to obtain profits. Instead, they keep making fuss about the cost.

In order to control costs, in addition to increasing the mining and use of its own mines, Xian Fu Steel also fully implements energy-saving and emission reduction in the smelting process. For example, the blast furnace gas is recovered and used for power generation. The amount of electricity generated so far has taken up all the electricity. More than 30% of the amount. Chuxiong Desheng Steel Co., Ltd., another top three privately owned steel company in Yunnan, has the same approach to control costs as Xianfu Steel.