Since the official trading of the iron ore spot trading platform in China on May 8 this year, the transaction has been very quiet. According to the latest data from the Beijing International Mining Rights Exchange, China’s iron ore spot trading platform reported only 6 total filings last week, with a total filing amount of 944,728 tons. Last week, not only was the number of declarations and the number of applications significantly reduced, but also the second time. There are zero deals.

Spot trading platform trading light

“A summary of the iron ore spot trading platform in China for one week” stated that the cold report once again confirmed that in the current market environment, both steel mills and traders are extremely pessimistic about the future trend. There was no 1 buying report last week. It also fully explained the current bleak market environment. Future platform selling prices will likely fall further and seek buying.

“The downturn in the industry has resulted in the light trading on the spot trading platform.” Galaxy Steel analyst Li Yi told the ** Daily reporter that the current steel industry situation is not optimistic, steel (3626, -38.00, -1.04%) prices significantly The decline has caused the steel mills to be in a situation of serious losses. For this reason, the shutdown of some large steel mills has reduced the demand for imported iron ore. As the major mines that supply the leading forces, they have taken advantage of the Chinese economic market, increased their efforts in development, and increased the output of iron ore. Under the dual pressure of oversupply and sluggish demand, the price of imported ore has continued to decline recently. “Under the psychology of buying and selling, or buying and selling, most steel mills that are demanders of iron ore continue to wait and see in pessimism,” said Li Yi.

Admission threshold high participants deterred

It is understood that since the establishment of the trading platform, although there have been 177 domestic and foreign members, including the top four international iron ore supply giants and more than 60 domestic large-scale steel companies, the transaction has been very dull. As of August 17th, the platform had applied for a total of 671 applications, and the number of purchases was significantly lower than that of selling; the total turnover was 25, with a total volume of 3,219,700 tons, and a turnover of 21.6 million yuan.

“The entry barriers to the platform are high, and the huge transaction fees make most people in the industry frightened.” Qi Gangkai, an analyst at Yi Gang Information, said that the annual fee for members of China’s iron ore spot trading platform is divided into two categories: 30,000 US dollars or 5,000 US dollars. In addition, in the transaction process, transaction fees must also be charged in accordance with the amount of 0.125 US dollars / ton. For the upstream mines, transaction costs of $0.125/ton are not much, but for low-margin traders and steel mills this rate is not low. "SMEs are more sensitive to transaction costs, and the current high transaction costs will certainly affect their enthusiasm for participation," Qi Junkai said.

New trading model encounters conflict

It is understood that in addition to the sluggish market environment and the high barriers to entry, the questioning of the new trading model is also one of the reasons why the iron ore spot trading platform is relatively light. “At present, the platform adopts the spot trading method, and most of the domestic large-scale steel mills maintain the long-term trade mode. Therefore, at the beginning of the trading platform listing, large-scale steel plants may not be too enthusiasm.” Changjiang** Steel Analyst Yang Xiaoqiang said that in the current model, high procurement costs and low voice rights are indeed no small problems.

The domestic iron ore trade has previously adopted the "one-on-one" model, and may feel uncomfortable for the current platform "transparent" transactions. Yang Xiaoqiang believes that the industry needs a process to accept this new type of transaction mode. "From the current situation analysis, the short-term adverse environment is difficult to change, so the platform freezing point market may continue."