"Tariff stick", export ban, once again let the market become nervous.
First of all, the Indian government suddenly announced that from May 22, the formal increase in export tariffs on iron ore, which different iron grades and varieties of iron ore export tariffs up to 45% -50% range. At the same time, the import duty rate of coking coal and coke was reduced to 0. According to the statistics of the International Trade Organization, from January to April 2022, India exported 10.72 million tons of iron ore to the world, and 6.24 million tons were exported to China.
Also, Indonesia is rumored to have an export ban on commodities. BahlilLahadalia, Indonesia's investment minister and chairman of the Investment Coordinating Board (BKPM)), said recently that the Indonesian government will stop exporting bauxite and tin in 2022.
Some analysts pointed out that this India, Indonesia's export policy adjustment, or will further aggravate the global metallurgical products supply tension, the trend of commodity price increases or will continue. In this context, the A-share reappearance of "coal" market, coal plate significantly higher, non-ferrous stocks is to set off a wave of stops. According to Wind statistics show that, as of May 20, A shares of coal, non-ferrous metals and iron and steel plate's total market value of about 50000 billion yuan.
Export ban, tariffs
Because of the domestic inflation rate "burst table", India suddenly wielded the "tariff stick" to limit the export of iron ore, trying to control the domestic price of related products. The price of related products.
According to India's Ministry of Finance, on May 22, the Indian government formally raised the export tariffs on iron ore, including different iron grades and varieties of iron ore export tariffs up to 45% -50% range. In addition, the width of 600 millimeters above the hot rolled, cold rolled and coated sheet and coil export tariffs from 0% to 15%, iron ore, pellets, pig iron, bars and wires and some stainless steel varieties of export tariffs have also increased to varying degrees.
Worthy of caution is that India, as an important global supplier of iron and steel products, a sudden and substantial increase in export tariffs on related products, or will once again change the global balance of supply and demand of commodities, which has a greater impact on the concentration in the export of iron ore and iron and steel products.
And the increase in export tariffs on iron ore may have some impact on China. According to statistics from the International Trade Organization, in 2020, India exported a total of 52.2 million tons of iron ore to the world, of which 47.32 million tons were exported to China, accounting for 91%. 2022 January-April, India exported 10.72 million tons of iron ore to the world, exported to China for 6.24 million tons, accounting for a significant drop to 58%.
Futures market, since November 2021, iron ore futures main contract all the way up, from the low point of 511.5 yuan / ton once climbed to 843 yuan / ton, the cumulative increase has reached 64.8%. With India's sudden increase in export tariffs on iron ore, or will stimulate the domestic iron ore futures prices continue to move higher.
Mysteel believes that the tariff adjustment, mainly on its 58% powder ore and Indian pellet imports will have some impact on the impact of imports of pellets is greater than the impact of powder ore, powder ore in the 58% impact is greater than more than 58% varieties. Indian pellets to China to reduce the volume may be more obvious, at the same time some traders have been clear not to fulfill the pellet contract after June.
Currently, domestic pellets are sold at around 1,300 yuan per ton (about $176 per dry ton), and if the price of Indian pellets follows the export tariff hike of 45%, it is expected that existing steel mills using Indian pellets will consider using domestic pellets.
Meanwhile, Indonesia is also rumored to have an export ban on commodities. BahlilLahadalia, chairman of Indonesia's investment minister/Investment Coordinating Board (BKPM)), said recently that the Indonesian government will stop exporting bauxite and tin in 2022 to support upstream and downstream construction of related industries.
According to customs data, in the first quarter of 2022, China's cumulative imports of Indonesian bauxite was 6.768 million tons, an increase of 118% year-on-year, and in March, China's imports of bauxite from Indonesia accounted for 21.2% of the total volume, according to SMM data.
In addition, Indonesia's tin reserves, production are ranked second in the world, according to Indonesia's Ministry of Energy and Mining, the country's tin ore reserves of 2.23 million tons, tin ore reserves of 2.29 billion tons; 2021 Indonesia's tin production target of 70,000 tons.
Some analysts pointed out that the India, Indonesia's export policy adjustment, or will further aggravate the global metallurgical products supply tension, the trend of price increases in commodities or will continue, it is worth to give sufficient attention.
Indian coal "emergency"
Currently, India's domestic inflation rate continues to "burst the table". According to the latest data disclosed by Indian officials, the inflation rate reached 7.79% in April 2022, the highest level in 17 months.
In order to curb inflation, the central bank of India has raised the benchmark interest rate by 40 basis points in May. But India's inflation is more of an imported inflation, triggered by price hikes in imported commodities such as coal, crude oil and edible oil.
For a large number of imported energy products, the Indian government has also significantly reduced import tariffs. According to India's Ministry of Finance, from May 22, the Indian government will be coking coal, coke import duty rate from 2.5%, 5% to 0 tariffs.
Has always been, India is a large coal-consuming country, coal external dependence of more than 20%, imports of about 300 million to 400 million tons of coal per year, mainly from Indonesia, Australia and South Africa.
Since 2022, coal prices in the international market have soared as the Russian-Ukrainian conflict has disrupted the supply-demand balance in the global coal market. Indian manufacturers have had to buy coal at higher prices, with the cost of imports having risen by 35% compared to 2021.
Meanwhile, rare hot weather within India has led to a surge in demand for electricity, erupting into the worst power crisis it has faced in more than six years. According to Indian media reports, the Indian power manufacturers' coal pool is at its lowest level in nine years before summer, with only eight days of consumption, compared with India's previous advice to power plants to have an average of at least 24 days of stockpiles.
And India's domestic power generation, which is dominated by coal generation, accounts for as much as 70 percent of the total, which has led to record consumption of coal since 2022 and has had to bear the brunt of the rising coal.
India has further stepped up coal imports and the country has asked the power regulator to allow power producers to import 30 percent of their coal requirements by March next year, the media reported, citing government documents. Earlier, the Indian government had allowed the share of imported coal in total demand to rise to 10 percent, or about 38 million tons, as demand outstripped supply.
In fact, while European countries are boycotting Russian coal, India is "quietly" buying Russian coal at low prices. According to the data released by the commodity research institute Kpler, in March this year, India's coal imports from Russia totaled 1.04 million tons, a record high since January 2020. It was only after being condemned by the West that India slowed down its imports.
Also, India has imported Russian crude oil in a big way, having bought at least 13 million barrels of Russian crude since late February this year, compared with about 16 million barrels from Russia for the whole of 2021, according to Rosatom.
With India's large purchases of Russian oil, Russia jumped to become India's fourth largest oil supplier in April. At the same time, India lowered its oil imports from the U.S., which almost halved its share of India's total imports to 3 percent.Refinitiv expects India's oil imports from Russia to increase further to about 487,500 barrels in May on the back of elevated domestic demand.
Resource stocks to soar again?
Commodity supply constraints, the background of soaring prices, the world's energy stocks, seems to have become the capital market "safe haven.
Since 2022, the global oil giant - Saudi Aramco's share price once soared more than 33%, the total market capitalization is beyond Apple, became the world's highest market capitalization of listed companies. In addition, ExxonMobil, Chevron, Total, Petrobras, ConocoPhillips and other energy giants have soared, are significantly outperforming the market over the same period.
At the same time, on May 20, A-share reappeared "coal fly color dance" market, coal plate significantly higher, the coal index rose 4.45% that day. Individual stocks, flat coal shares, large energy now stop, Shanxi Coking Coal, Shanxi Coal International, Huayang shares with the rise.
For the reason that the coal industry higher, CICC pointed out that in the supply shortage, demand rebound, superimposed on the geopolitical conflict events brought about by the reconstruction of supply and demand, in the short term, the price of coal or by three factors to promote: 1) the peak of the summer coal season is approaching, the demand may be strong; 2) the epidemic gradually improve and stabilize the growth of the power of the gradual recovery is expected to demand; 3) the upstream raw materials exports are expected to boost demand Formation of support.
In the medium to long term, the geopolitical conflict triggered by the global energy supply and demand pattern reconstruction, not only lead to short-term high coal prices, but also likely to raise the global cost of coal use in the medium to long term, resulting in the medium to long term pivot of the price of coal shifted up.
CITIC Securities also said that the National Bureau of Statistics data in April showed that domestic coal production bottlenecks exist, imported coal in May or re-emerge in the reduction of domestic coal supply is still tight.
In addition, in some countries under the stimulus of the export ban, the A-share non-ferrous metals plate on May 20 also rose sharply, non-ferrous stocks is a wave of stops, Aluminum Corporation of China, Minfa Aluminum, Shenhuo shares, Tianshan Aluminum, Jiaozuo Wanfang, and Sheng shares and other shares stopped. According to Wind statistics show that as of May 20, A shares of coal, non-ferrous plate total market value of up to 40850 billion yuan.
Chief Editor: Tactical Heng