After the three-day Mid-Autumn Festival holiday, the iron ore market seems to have changed?The price of 62% Platts iron ore surged $13.55 / ton to $107.55 / ton on Sept. 22, the first day after the Mid-Autumn Festival holiday.Meanwhile, the main iron ore contract on the Dalian Commodity Exchange rose 5.61 percent to 678 yuan per ton.Given the consistent performance of black futures, especially iron ore futures, some market voices even believe that iron ore prices have halved in the past two months, and a new strong rebound is about to begin?

In fact, there seems to be nothing special happening during the Mid-Autumn Festival. Even the day before the Festival, the price of 62% Platts iron ore fell by $5.70 / ton, and directly fell below the $100 / ton mark on September 21.Many people also feel confused for this rise, feeling "unreasonable rise".The author believes that the iron ore price will not continue to rise, or even repair the previous oversold, before the National Day replenishment caused a brief back dip, then will quickly continue to fall to a balance range.Can even assert that the next to the end of the year, iron ore prices run weak.The reasons are as follows:

01 Iron and steel facing the "four control" production restrictions are increasing

"Double control" change "four control", limit production involves a wider range, greater strength.Previously, for the steel industry, "double control" refers to control capacity, control output.Interestingly, at the end of August and the National Development and Reform Commission has issued the first half of 2021 regional energy consumption of the double control target completion barometer ", from the National Development and Reform Commission after the provincial energy consumption index early warning grading, each related provinces began to reduce the total energy consumption and energy consumption intensity of unprecedented policy adjustments, some even consider pauses residential electricity.According to the barometer, nine provinces, including Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi and Jiangsu, are on "red alert" for the progress of energy intensity reduction, and the situation is very serious.

As a typical "two high" industry -- steel to become the main industry of double control, was once again focused on the flash.Previously, the industry only thought that the pressure of "2+26" cities to control output is greater, and the "double control" of energy consumption and energy efficiency has obviously expanded the scope and strength of the steel industry to limit production.To control production capacity, output, total energy consumption and energy intensity, steel is facing unprecedented pressure of "four controls". Double control of energy consumption and energy efficiency is another "black swan" in the iron and steel industry in the second half of the year.

In fact, the "four controls" are highly unified in nature. The core means is still output control, but local governments have more tools in their toolbox to implement output control.Especially for electric furnace steelmaking enterprises and environmental protection of "A" steel enterprises, there is no doubt by "accidental injury".Energy consumption and energy efficiency double control basically belongs to the non-discrimination treatment, electric furnace steelmaking enterprises or environmental protection "A" enterprises if in the barometer of energy consumption in provinces such as Jiangsu, will still be limited production.For crude steel output is very big negative, for the steel industry as a whole raw material market including scrap steel and iron ore market is more big negative.

China's crude steel output stood at 83.24 million tons in August, the third consecutive month-on-month decline, the second consecutive month-on-month decline and the lowest level since March 2020, according to the National Bureau of Statistics.From January to August, China produced 733 million tons of crude steel, up 5.30% year on year.If we want to achieve the goal of not increasing crude steel output this year, the task task in the next few months is very difficult, especially in the case of less electric furnace steel, most of the pressure to cut crude steel in the long process of steel making enterprises, the average crude steel output dropped nearly 10 million tons per month, a year-on-year decline of more than 10%.

Let's talk about limited production execution.This thought through the means of environmental protection to control output is a little farfetched, because there are many domestic steel enterprises in environmental protection is very good, the marginal role of environmental protection means to control output will be less and less, the execution of production control may not be sufficient.Never thought, energy consumption and energy efficiency double control related policies sacrifice, directly from a more fatal point of view to the steel industry stuck.The government has added a sword to its production-limiting toolbox.Recently, Jiangsu, Yunnan, Guangxi, Shaanxi and other places have related policies, many iron and steel enterprises have begun to suspend production or reduce production in the form of maintenance, the scope is very common.Is the so-called, capacity and output double control of steel enterprises, energy consumption and energy efficiency double control can.

In addition, from the medium-term supply point of view, according to the reports issued by the four mines, the output and shipments of the four miners will maintain a relatively stable level.In addition, there is little possibility of a sharp decline in the supply of non-mainstream mining projects that resumed production due to high iron ore prices in the second half of last year and the first half of this year.

In general, there is no fundamental support for the long-term sharp rise in iron ore prices, and there is no room for iron ore overfall repair from the perspective of inventory, cost and historical data. In the short term, there are many complex factors affecting iron ore, the most obvious is the capital speculation in the futures market.

02 Alert to a new round of capital speculation

In recent years, every time iron ore prices rise and fall, no doubt from the futures market began.Futures market is playing an increasingly obvious role in guiding the price of iron ore spot market, and even the spot market is suspected to cooperate with the capital market.This iron ore price rise also just confirms this point.We cannot find reasonable and effective evidence to prove this, does not mean that there is no, does not mean that there is no reasonable doubt, if indeed found relevant evidence, will some capital institutions, some people will be punished by law?In recent years, many times, once an unverified news broke, it would cause a change in the futures price, which would lead to a change in the spot transaction price of the day.Futures were born to discover prices and reflect expected changes in future prices.But now some futures varieties stationed for a long time a large number of speculative capital, these capital through all kinds of speculation to affect the stability of the spot market, which is undoubtedly contrary to the original intention.Who of today's futures market participants would go into every trade thinking they were trading iron ore in January or May?Analysts also sometimes use current fundamentals to gauge future price movements.Many insiders believe that the current iron ore futures market trading mechanism is more inclined to multi.Therefore, the optimization of iron ore futures trading mechanism is imperative.

And here, too, we have to talk about current international politics.In recent years, the foreign policy of western countries, led by the United States, towards China gives a feeling of uncertainty.The West is no longer shy about confronting China.Judging from the recent us, UK and Australia nuclear submarine order incident, The Australian authorities have completely turned to the US, even at the cost of isolating themselves from Asia and the EU.Future iterations and changes in Australian authorities' policies are worth our vigilance.Let us not be naive to think that Wall Street capitalists will not be hostile to China in order to make money selling iron ore, let alone that we should make full use of the low cost iron ore dividend brought by the globalized economy and market-oriented economy.Try to ask, in these years of oversupply, iron ore prices low?Are the big four mines making less money?Which is not repeatedly refresh profit historical extreme value.

Iron ore is China's import volume is second only to oil commodity, highly dependent on Australia.But the country has previously paid far less attention to iron ore than to oil.First, iron ore dependence is higher than oil;Second, the source of iron ore is highly dependent on Australia, while the source of oil is relatively rich, and the relationship between the main source countries of oil import and China is more reliable.Third, unlike oil, there is no national reserve mechanism for iron ore.These points determine the shortage of China's current iron ore resources guarantee ability, and it is this point to the international capital speculation space.They make money in the spot market and harvest it in the capital market.And many domestic capital also follow blind or really heckle, trying to share a piece of the action.

Of course, we do not believe that lower iron ore prices are better.From the perspective of industrial chain, a healthy iron ore market with reasonable supply and demand relationship and full play of market mechanism is what we welcome to see, and also conducive to the stability of the upstream and downstream of the iron and steel industry.Relevant mechanisms need to be established, relevant institutions need to be optimized, relevant market subjects need to be reconstructed, and relevant departments need to take the initiative.