Basic judgment: The demand for major mineral products has slowed down due to the economic slowdown in developed countries. However, due to the worsening geopolitical crisis, the prices of important mineral products such as oil that are subject to transportation constraints will intensify. In the event of emergencies, prices may surge higher, further increasing the cost of economic development.
On January 12, 2012, the European Central Bank announced that it would keep the benchmark interest rate unchanged at 1.00. It also announced that it would maintain the overnight deposit rate at 0.25 and the overnight lending rate at 1.75. Standard & Poor's issued a report on the 13th, depriving France of its "AAA" sovereign credit rating; at the same time, banks suspended the negotiation process with Greece on debt restructuring. This is the first blow this year. Standard & Poor's announced in the report that the agency decided to lower the long-term sovereign credit ratings of Cyprus, Italy, Portugal and Spain by two notches each; it also lowered the long-term sovereign credit ratings of France, Austria, Malta, Slovakia and Slovenia by one notch each; at the same time Affirming existing long-term ratings for Belgium, Estonia, Finland, Germany, Ireland, Luxembourg and the Netherlands.
Judging from the economic data released by the world's three major economies, the United States, China, and the European Union, the signs of economic growth slowdown are very obvious. The same employment problem is also plaguing the United States, the world's largest economy. The U.S. unemployment rate remains at a high of 9. Although the recent manufacturing data has rebounded, consumption, which accounts for 70% of the economy, is still weak. Employment data representing consumption power shows that The current recovery in the United States is mainly driven by the economic growth of emerging markets and is not endogenous. As the growth rate of emerging economies represented by China slows down, the economic situation in the United States will inevitably weaken; the further spread of the European debt crisis has cast a shadow on the European economy, so the slowdown in global economic growth will inevitably bring about negative consequences. With the weakening demand for bulk commodities, mineral product prices are expected to fluctuate upward in 2012 at the current price level.
Column 11 The global economic situation affects mineral product prices
The macro background of 2012 is that the global economy is weakening, and important countries have entered the election campaign stage. The economic trend can be divided into two major stages. . In the first stage, the European debt problem intensified. The first four months were a period of concentrated maturity of European debt. Europe's long-term and short-term rescue measures are difficult to escape the outcome that everyone agrees on, which will inevitably make the market's pessimism difficult to retreat. In particular, this process is likely to be accompanied by the loss of the AAA ratings of countries such as France, a surge in the government bond yields of some countries, and a rise in the U.S. dollar index. At this stage, copper may have an obvious short market. As an important product to fight against inflation in the early stage, gold is bound to decline in the context of a weakening global economy. The second stage is the post-European debt era. The intensification of the European debt problem will inevitably prompt the problem to be solved in some way. The more pessimistic one is the disintegration of the Eurozone. The more optimistic one is the institutionalization of fiscal union, with the European Central Bank assuming the role of the lender of last resort. At this time, European countries will focus on developing the economy and reducing unemployment. The changes in demand for mineral products caused by policy trends in China and the United States and the economic trends affected by them will become the main factors affecting their prices.
Coal: The trend of domestic coal prices depends more on international coal prices. From the perspective of the domestic market, as new coal production capacity will be gradually released, coal output can continue to maintain a certain growth rate. Affected by factors such as accelerating economic structural adjustment and slowing economic growth, the growth rate of coal demand may slow down. If international coal prices can remain relatively stable on the current basis, the upward momentum of domestic coal prices itself will be significantly weakened. The trend of international coal prices in 2012 faces great uncertainty. It may continue to fall or rise, or it may continue to fluctuate within a narrow range. If the European debt crisis intensifies, eventually leading to a significant decline in the real economy of the Eurozone and affecting major global economies, energy demand in the international market will inevitably decline. By then, coal prices will also see a correction. However, after the 2008 global financial crisis, countries will be more capable of cooperating to rescue the market, so the probability of this assumption becoming reality is relatively small. On the contrary, the probability of international coal prices rising is greater.
In order to provide sufficient liquidity to the market, major economies currently still implement loose monetary policies, and some economies have even launched quantitative easing policies again, which has laid hidden dangers for rising energy prices in the international market.
Crude oil: Continue to rise. In the event of extreme events such as the Iran war, oil prices may rise to above US$150/barrel. In 2012, crude oil prices fluctuated around US$110/barrel. On February 7, 2012, the U.S. Energy Information Administration (EIA) raised its forecast for global oil demand growth in its monthly report, the first increase since October last year. It also expected that due to reduced oil production by non-OPEC oil-producing countries, Oil markets will tighten. EIA raised its forecast for global oil demand growth in 2012 by 50,000 barrels per day to 1.32 million barrels per day, and also raised its forecast for global oil demand growth in 2013 by 20,000 barrels per day to 1.49 million barrels per day. The EIA also lowered its 2012 daily production estimate for non-OPEC countries by 140,000 barrels to 52.54 million barrels per day, 770,000 barrels higher than 2011 daily production; it raised its 2013 production estimate by 90,000 barrels to 53.39 million barrels per day. The EIA also said that total crude oil production from OPEC members fell to 30.77 million barrels per day in January, the first decline since October last year. OPEC crude oil production fell in January mainly due to reduced crude oil production in Saudi Arabia.
U.S. crude oil and refined oil inventories increased (Figure 55), while crude oil imports decreased. As of February 3, 2012, U.S. crude oil inventories increased by 304,000 barrels to 339 million barrels. Gasoline inventories increased by 1.63 million barrels to 232 million barrels. Distillate stocks, which include heating oil and diesel, rose by 1.17 million barrels to 147 million barrels. Starting from late January 2012, the crude oil freight index began to fall, which is conducive to maintaining the stability of crude oil prices.
Iron ore: stable but declining. In the future, the expansion of foreign mine production will be greater than the increase in China's crude steel production. Therefore, the iron ore supply and demand pattern will change, and it will be difficult for the iron ore market to return to a crazy rise. Iron ore prices will change more frequently in 2012, but the range of price changes will narrow. The overall price will show a slow downward trend, but it will still be at a high level. Due to domestic concerns about the real estate market, the Baoshan Steel City Composite Index has been declining (Figure 56). The steel market will fluctuate and bottom out under the influence of violent fluctuations in the financial market. The steel industry has entered a very serious moment. Not only industry profits have dropped to freezing point, The steel industry's losses are also expanding, and demand for iron ore will slow down.
Column 12 The deterioration of the geopolitical situation has raised crude oil prices
Since the regime changes in Tunisia, Egypt, and Libya in the Middle East in 2011, Syria has become a new "hardest hit area." The United States, Europe, Western countries, and major powers such as Russia are engaged in an unprecedented fierce competition over the Syrian issue. At a meeting held in Cairo, the foreign ministers of the Arab League called on the United Nations Security Council to approve the establishment of a joint peacekeeping force between Arab countries and the United Nations to replace the Syrian Observer Mission and supervise the implementation of a ceasefire by the opposing parties in Syria.
Western countries are pressing hard on the Syrian regime step by step, from political suppression and diplomatic isolation to economic sanctions and military deterrence, determined to overthrow the current regime of Bashar al-Assad in Syria. Behind this, what kind of "wishful thinking" did they have? This move by the United States and Europe is to ensure Israel's security while squeezing the interests of China, Russia and other countries in the Middle East. Controlling the Middle East and implementing the "Greater Middle East Democratic Transformation Plan" have been the long-standing strategic design of the United States. Although the background motivations of this "Arab Spring" are very complex, they are very directly related to the United States' long-term external intervention and strategic design. The United States is trying to take advantage of the political turmoil in the Middle East and North Africa to clear out anti-American regimes and consolidate its control and dominance in the Middle East.
At present, the situation in Syria is still developing and changing, and the continued turmoil in Syria will become an important watershed in the transformation of the Middle East pattern. Due to Syria's unique geographical location and influence, changes in the situation in Syria will not only have a major impact on countries such as Iran, Lebanon and Palestine, but may even change the political pattern of the entire Middle East. Continued instability in Syria or regime change will become the pattern of the Middle East. The important watershed of change will definitely exceed the impact of regime changes in Egypt, Libya and other countries.
One is to have a direct impact on the Middle East peace process; the other is to have a significant impact on the energy output of the Middle East. Although Syria itself does not have astonishing oil reserves, changes in its political situation will directly affect the oil exports of neighboring major oil-producing countries such as Iraq, Saudi Arabia, Iran, and Kuwait, thereby triggering oil price fluctuations and even oil crises; third, the turmoil in Syria will Terrorism provides the soil; fourth, the balance of strategic power in the Middle East will be further unbalanced.
The "war" between Iran and the United States has escalated again. The United States announced that it would freeze Iran's assets in the United States, the United States and Europe stopped importing oil from Iran, and Iran threatened to block the world's important crude oil supply channel - Hormuz. strait. The Strait of Hormuz is the only way for most Middle Eastern crude oil to be exported, and the Middle East accounts for 70% of the world's energy demand and supply. A large amount of crude oil passes through the strait every day. A rough estimate is equivalent to 90% of the total oil exports from the Persian Gulf. , or 40% of total global oil consumption. If Libya was a bomb in the crude oil market in 2011, then Iran is expected to follow in its footsteps in 2012. The political situation in the Middle East was one of the unstable factors for international oil prices in 2012. In 2011, political turmoil in Libya triggered a sharp rise in international oil prices. Obviously, Libya's position in the international crude oil market is far inferior to that of Iran and Iraq. Once problems arise between Iran and Iran, it will directly lead to a sharp drop in international crude oil supply and demand, and the resulting panic factors will further lead to significant fluctuations in international oil prices. It can be said that as the Persian Gulf region is the world's oil reservoir, any political turmoil in it will trigger turbulence in international oil prices.
On February 19, 2012, the Iranian Oil Ministry announced on its website that Iran had stopped selling oil to British and French companies. The oil industry is the lifeblood of Iran's economy. As the second largest crude oil producer in the Organization of the Petroleum Exporting Countries, Iran exports an average of 2.6 million barrels of crude oil per day, of which about 20% is exported to EU countries, mainly including Italy, Spain and Greece. France is not the main export target of Iranian oil in Europe. The United Kingdom completely stopped importing oil from Iran in the third quarter of last year.
In 2011, Iran exported 220,000 barrels of crude oil and 60,000 barrels of natural gas per day to China, exceeding 10% of China's total daily oil imports. Currently, the National Iranian Oil Company (NIOC) and the China International Petroleum and Chemical Corporation (UNIPEC) have reached an agreement to increase oil exports to China to 500,000 barrels per day.
In 2011, China’s crude oil imports from the Middle East accounted for 58.6% of the total annual imports. In addition, the prospects for the Middle East and North Africa are uncertain. The Chinese government attaches great importance to the development of the situation in the Middle East, adopts diversified oil imports, and encourages oil imports from Africa, Russia and other countries import oil.
Copper: The rise is weak. The year in which the world's refined copper supply is most scarce in history may have passed, and the role of supply and demand on copper prices in the later period will turn from promotion to support. Research shows signs of supply shortages in the copper market will improve in 2013 after reaching a low in 2012. As the funds invested in copper mine development mature in the early stage (2009-2010), the difference between the growth rate of refined copper supply and the growth rate of demand will tend to be balanced by 2013.
Although the macroeconomy has weakened in the face of the impact of copper prices, there is still a certain continuity effect. In 2011, global copper consumption grew slowly due to weak global macroeconomics. Although China accounts for about 40% of copper consumption, it has shrunk by nearly 1/3. This is mainly due to domestic monetary tightening policies and other real estate control policies
Figure 55 Changes in U.S. crude oil inventories
Figure 56 Changes in Baoshan Steel City Comprehensive Index
Column 13 Iron Ore Pricing Mechanism and Its Impact
Iron ore pricing has evolved from long-term agreement pricing to quarterly pricing, and then to monthly pricing Pricing, and gradually transforming into several stages such as indexed pricing. In fact, it is the result of long-term monopoly on the international iron ore market.
Long-term cooperation mechanism. Due to the special properties of iron ore itself, both supply and demand parties conduct transactions in the spirit of long-term cooperation with the purpose of establishing a stable and long-term cooperative relationship. Long-term agreements are used to determine the quantity, variety, and price (FOB FOB price). The buyer is responsible for transportation. , the specific trading practices and price mechanisms formed. The most representative one is the iron ore annual long-term agreement mechanism.
Annual iron ore price negotiations began in 1981, with iron ore suppliers and consumers negotiating to determine the iron ore price for a fiscal year.
Quarterly pricing. In 2010, the three major international iron ore mining giants successively abandoned the long-term contract mechanism, changed the pricing rules, and transitioned from the traditional annual pricing mechanism to a shorter-term quarterly pricing mechanism linked to the spot market. The pricing time cycle of the long-term contract mechanism changed from a fiscal The year is shortened to one quarter. The massive increase in production in the steel industry has led to a shortage of iron ore, forcing steel companies to accept quarterly pricing, and the long-term contract mechanism has collapsed. Chinese steel companies paid more than $70 billion more than last year.
Index pricing. In the era of long-term iron ore price negotiations, prices were basically formed through negotiations between mines and steel mills, reflecting the industry's consensus. However, in 2010, as the three major mines forcibly promoted quarterly pricing, the 40-year-old long-term contract model died, and indexed pricing emerged. After the implementation of indexed pricing, the determination of iron ore prices is no longer just a matter between mines and steel mills. In addition to mines and steel mills, market participants also include a large number of financial institutions and investment institutions, and even many speculators with unknown origins.
The main reasons for the change in the iron ore pricing mechanism are: First, the supply and demand relationship has undergone tremendous changes. As the world economy gradually picks up, global demand for iron ore is rising, and prices are bound to rise accordingly. The three major miners have chosen a pricing mechanism that is beneficial to the interests of suppliers. Second, affected by the financial crisis, the price difference between the spot market price of iron ore and the long-term contract price is too large, sometimes even more than double. During the financial crisis, raw material prices in the international market fell sharply, and some steel companies turned to the spot market to purchase cheaper iron ore. But when the economy recovered, demand surged again, spot market prices rose, and steel mills returned to purchasing iron ore at long-term agreement prices. Third, the development of the iron ore spot market provides a reference price for quarterly pricing. The spot market has developed rapidly in recent years. According to conservative estimates, the trading volume of the spot market has accounted for at least 10% of the total iron ore trading volume. Fourth, there are many financial speculators behind the change in the iron ore pricing mechanism. They see the huge potential and value contained in iron ore, a commodity that in their eyes has already become as valuable as gold, oil, etc. The financial properties of commodities. Fifth, the financialization of iron ore prices has begun. In May 2008, Deutsche Bank launched iron ore swaps. In May 2009, three major investment banks, Morgan Stanley, Goldman Sachs and Barclays, jointly launched cash-settled iron ore speculation transactions. Currently, there are three major iron ore indexes in the world, namely Global Steel News' TSI Index, Metal Herald's MBIO Index and Platts Energy Information's Platts Index, all of which use China's demand as the main reference indicator. In 2011, the "China Iron Ore Price Index" (CIOPI), developed and launched by the China Iron and Steel Industry Association, China Chamber of Commerce for Import and Export of Minerals and Chemicals, and China Metallurgical and Mining Enterprises Association, was officially released to the public on October 10, 2011. The first week of China's iron ore price index is also the first time the index has been released to the public. It is also an important step for China to participate in iron ore pricing. Starting from the second half of the year, due to the economic downturn, the growth of China's copper consumption was affected by the downturn in copper's downstream industries, such as the poor performance of automobiles, high-speed rail, real estate and other industries. These demand factors will likely continue to suppress copper prices in the first half of 2012, and the downward cycle still cannot be broken. However, as the macroeconomic situation improves, domestic economic policies are further relaxed, demand gradually recovers, and the endogenous driving force of physical consumption has been strengthened to a certain extent, copper prices will likely get rid of the weak and volatile market in the second half of the year. Therefore, the weak trend of copper prices will continue in the short term, the possibility of another decline still exists, and it will still take a certain amount of time and space to return to fundamentals.
Aluminum: wide oscillation. European demand is slowing down, and China's aluminum exports will face great challenges. Domestic real estate macro-control will not be relaxed next year, and real estate investment will continue to slow down. Affected by the increased subsidy threshold for energy conservation and emission reduction and purchase restrictions on automobiles, it will be difficult for automobile production and sales to achieve large-scale growth. On the supply side, due to the transfer of electrolytic aluminum production capacity to the west and the fact that many aluminum plants in the central and eastern parts have built their own power plants, the impact of rising electricity prices on costs has been weakened to a certain extent.
The overall market will remain weak in 2012. In the first quarter, the global economic situation is unlikely to change, and aluminum prices may continue to fluctuate downward. On the one hand, it is affected by the continued fermentation of European debt and the rebound of the US dollar. On the other hand, due to the high inventory of the London Metal Exchange (LME), it will take time to release the inventory pressure. The bottom may be reached at the end of the first quarter and the beginning of the second quarter, followed by a rebound in the second quarter. As for China, after the conclusion of the “Two Sessions” in March, economic policies will become clearer. With a large number of European debt maturing after February, a critical moment for the euro zone has arrived. By then, the direction of the European debt crisis will largely affect the trend of commodities. If the Federal Reserve launches QE3, it will be beneficial to aluminum prices. There may be another adjustment in the third and fourth quarters, depending on the economic growth of emerging countries such as the United States and China. Aluminum prices will continue to show "strong internally and weak externally."
Gold: Volatility upward. In 2012, under the influence of global economic recovery and the European sovereign debt crisis, gold prices will continue to rise after a short-term correction. However, with the successive introduction of global quantitative easing policies and the easing of the European and American economies, gold prices will definitely undergo a series of adjustments. Therefore, in 2012, gold prices will continue to rise in the process of continuous shocks and corrections. First, due to the slow pace of U.S. economic recovery, the Federal Reserve will continue to implement easing policies. The Federal Reserve lowered its median economic growth forecast for 2012 from 3.5 to 2.7, and expected the unemployment rate to be 8.6 by the end of 2012, much higher than the pre-recession level. Experts believe that the Federal Reserve will continue to maintain interest rates at extremely low levels to increase employment and further ease monetary policy if necessary. Second, the euro zone debt crisis is unlikely to be resolved in the short term. Although at the summit held in October 2011, euro area countries agreed to expand the size of the European Financial Stability Mechanism (EFSF) as an intra-regional aid fund, many investors have questioned its effectiveness in resolving the crisis and whether countries with sound finances are willing to continue Providing aid to countries with financial difficulties is also full of variables. After all, fiscal aid cannot restore financial stability to countries with financial difficulties. Only by taking necessary measures to reduce fiscal deficits can these countries regain investor confidence. Of course, it is still questionable whether countries with financial difficulties will implement relevant measures and whether investors will wait patiently for the measures to be implemented. Because of this, the market's investment demand for gold was strong in the third quarter, showing that investors regard gold as a safe-haven asset and a value-preserving investment tool.
Cement: stable but declining. Given that the oversupply situation will continue, the average selling price of the cement industry is expected to decline slightly. Affected by supply constraints, different regions may be under different pressures.
Potassium: high adjustment. The price trend of potash fertilizer in 2012 is still accompanied by many uncertain factors. The situation of "mixed ups and downs" may continue to exist, and supply will exceed demand in a short period of time in the first half of the year. Since the fourth quarter of 2011, with the winter storage plan postponed and the purchase quantity shrunk significantly, the market has become more pessimistic, and potash fertilizer prices have been at low levels and fluctuated. With the rush to transport potash fertilizers in Qinghai, the order supply has been slightly smoother, causing the social inventory of potash fertilizers to gradually increase. According to statistics, as of the end of December 2011, the inventory of potassium chloride in coastal ports was nearly 1.4 million tons, and the inventory of domestically produced and border trade potash fertilizer was nearly 2 million tons. At the same time, in recent years, my country's domestic potash fertilizer production has continued to expand at an average annual growth rate of 18%. In the first half of 2012, the total supply of potash fertilizer will reach about 7 million tons, and supply will exceed demand in a short period of time. It is expected that the potash fertilizer market as a whole may show a trend of shock decline and a slight rebound after bottoming out.