Domestic iron ore & steel mills in the industry losses

China steel industry association said today, affected by the first quarter growth dropped more than expected, crude steel production in many years some fell, industry-wide losses. Cisa is summed up in the press release in the first quarter industry characterized by “falling demand, production decline, falling prices, environmental pressure, the overall losses”.

Quarter of China’s imports of iron ore 227 million tons, up 2.28% from a year earlier, imported iron ore 80.51 million tons, in March year-on-year increase of 12.57 million tons, an increase of 18.5%. Import growth represents the trend of China’s iron ore increased external dependency, cisa predicted that iron ore external dependence will be more than 80%, is not conducive to the domestic steel industry security.

Black tie futures afternoon sharp diving, by confirming, iron ore, 1509 contract drop stop, rebar contract fell 2.87% to 1510, 1509 contract fell 3.42%.

Cisa is pointed out that the fixed asset investment, real estate development investment growth fall in steel demand. According to estimates, domestic consumption of crude steel apparent fell 6.2% year-on-year in the first quarter, “the whole, the downstream steel industry steel demand is difficult to grow.”

In order to guarantee the domestic iron ore production, May 1 this year, China will reverse the iron ore resources tax, levied at a reduced tax of 40%. At present, the iron ore resources tax rate to 80%.

Policy announced in early April, an analyst at standard chartered bank Melinda Moore resources tax is expected to decline, the proportion of domestic enterprises to reduce the production cost per ton about 19 yuan.

But cisa mentioned in today’s press release, “country on iron mine resource tax shall be levied at a reduced 40% after will play a role in relieving iron ore mine loss, but not enough to compete with foreign mines.”

Rating agencies Fitch Ratings analyst Stella Wang told the financial times, support iron ore production enterprises in China just delay the iron ore market to make the necessary adjustments. She said, “although the tax cuts can increase the income of the low-cost producers, the influence of the policy are likely to be limited and short-lived; cost-benefit erosion will soon be competition.”

Exports, cisa, points out that China’s iron and steel products in the international market trade disputes increase, steel export growth will decline. But no significant decline in the international market demand, and have spread both at home and abroad, China’s steel competitiveness is still obvious, exports will not significantly reduced.

Face sorrow with, cisa, continue to close down backward production facilities according to the requirements of relevant standards, released as soon as possible the second, third batch of cancel imported steel bonded under processing trade policy product list; Continue to keep domestic iron ore mine enterprise tax burden down and domestic iron ore market share.