Steel industry is expected to remain low

Steel industry is expected to remain low

Mining giant collective cut costs increase

Yan Bin, president of either Rio Tinto China, yesterday said publicly that this year will further cut costs $ 750 million. In addition, will continue to increase in accordance with the previous plan, but this plan and the other two mining giant Vale and BHP Billiton coincide. Analysts pointed out that the mining industry is just beginning to adjust, is expected to continue for some time; and the international giant with a clear advantage early expansion continues, it will be difficult to change the pattern of supply exceeding demand, short-term iron ore prices will not rebound.

Either Bin Yan said, "this year to $ 750 million for further savings, in 2015 to 2017, spending three years will not be more than seven billion US dollars." He noted that the savings plan and the overall market downturn related to iron ore, "As expected in 2015 iron ore market is still not optimistic, Rio Tinto will continue to save costs, reduce expenses and increase productivity. "

It is understood that Rio Tinto last year began to slash costs, and make the move benefited the performance. According to Rio Tinto announced 2014 earnings, thanks to slash costs, its 2014 net profit increased to $ 6.5 billion, an increase of 78%.

In addition, cutting costs is not the only one of Rio Tinto. BHP Billiton also pointed out that its earnings report, the company will reduce future capital expenditure target, and is expected to save $ 4 billion in costs over the next two years. Vale, has said, it will strive to reduce costs and further reduce capital spending plans.

Downturn in iron ore business and did not impede Rio Tinto's expansion plans. Either Bin Yan, said Rio Tinto will continue to follow the previously planned to increase production, "Despite the current downturn in the price of iron ore, but Rio's decision to increase production is based on a more long-term market supply and demand considerations."

Guangzhou Daily reporter observed, Rio Tinto plans to continue to increase with the addition of two mining giants, namely Vale and BHP Billiton's strategy coincides with the massive increase.

Industry: Mining adjustment has just begun

For the mining giant cut costs, the steel industry analysts Shengzhi Cheng believes that mining giant collective cut costs caused by the industrial environment, but also had the consequences of rapid expansion of the mining industry, "Adjusting the mining industry has just begun, is expected to continue for some time." As for the increase, analysts believe that the domestic iron ore demand will be less than in 2014, but because of the international supply continues to increase, expected in 2015 iron ore oversupply contradictions will become more prominent.

In addition, a number of international authorities in 2015 iron ore prices will continue to fall. Citibank forecast 2015 iron ore prices dropped to $ 58 / ton, UBS predicts will drop to $ 66 / ton.

Insiders on the prediction agrees. The source said that the three mines in production costs and scale still has a very distinct advantage, "these three major iron ore mining cost suppliers only $ 20 to $ 40 / ton, plus freight Shanghai is only $ 40 to 60 USD / ton. coupled with continued decline in international oil prices, production and operation costs may decline further, even if the price fell to around $ 60 / ton, three mines is still room for profit. "

In addition, the analysis pointed out that after the Spring Festival, the country has not improved significantly lower operating mills, steel prices remain low, reducing purchases of iron ore, so the domestic price of imported ore market no significant fluctuations.