At the beginning of last night's trading session, the stock price of Beamr Imaging surged by over 240%, reaching its highest point in 8 months. On the news front, the company announced a joint study with Nvidia on the application of the latest video standard AV1. Beamr has previously announced plans to launch a new video cloud service on Amazon AWS on February 20, 2024, with support from Nvidia.
As of the close of this morning, Beamr Imaging has surged by 371.56%, with a transaction volume of 2.07 billion US dollars. After last week's outstanding financial report, Arm, which had accumulated over 60% of gains, continued to soar. In the morning session, it hit a historic high in intraday trading, rising 42.3% and closing up 29.3%. Since the release of the financial report, it has accumulated over 90% of gains in the past three trading days. The Nasdaq China Golden Dragon Index rose 2.09%, with popular Chinese concept stocks closing generally higher. Alibaba rose 1.55%, JD.com rose 2.28%, Pinduoduo rose 3.21%, NIO Motors rose 2.7%, and Xiaopeng Motors rose 4.06%.
The 2024 Spring Festival box office exceeded 3.7 billion yuan
According to data from Lighthouse Professional, as of 21:43 on February 12, 2024, the total box office (including pre-sales) for the Spring Festival period (February 10 to February 17) exceeded 3.7 billion yuan.
Putin releases important data
According to CCTV News, on February 12th local time, Russian President Putin stated at the Russian Economic Work Conference that Russia's Gross Domestic Product (GDP) will grow by 3.6% year-on-year in 2023, higher than the global average economic growth rate. This achievement is mainly based on domestic economic potential.
Putin stated that domestic consumer demand in Russia is strong, and Russian government departments need to continue to curb inflation.
Putin also stated that in the process of development, it is necessary to achieve a balance between economic development itself and employment security and price stability. In 2024, Russia and the global economy are facing various challenges, and the government will adopt active economic policies to promote the development of important fields such as industry, agriculture, transportation, and high-tech industries, while creating new job opportunities.
"American ships attacked by missiles"
According to CCTV News, at noon local time on the 12th, Yehya Sareya, a spokesperson for the Yemeni Hussai armed forces, said that "the Hussai armed forces launched multiple missiles and attacked the American ship Star Iris, which was sailing in the Red Sea.". Sarea also reiterated that "the Hussai armed forces will continue their military operations until Israel stops its military operations in the Gaza Strip and lifts the blockade on the Gaza Strip.". Currently, the US has not responded to this.
The UK Maritime Trade Action Office previously issued a statement stating that in the early hours of the 12th local time, "a ship was attacked by two missiles 40 nautical miles (approximately 74 kilometers) south of the Yemeni port city of Muha.". It is said that the ship and crew are safe, and the ship is continuing to sail towards the next port of call. According to Ambry Security Risk Management in the UK, the ship that was attacked was a "cargo ship flying the flag of the Marshall Islands and owned by a Greek company." This cargo ship was hit twice by missiles in a short period of time while crossing the Strait of Mandela, but the ship was not hit.
BHP Billiton train drivers announce a strike, how much impact will it have?
The train drivers of BHP Billiton's iron ore business in the Pilbara region of Western Australia have voted to hold a 24-hour strike on Friday, which may reduce the export supply of Australian iron ore. The Mining and Energy Union has announced that workers plan to suspend work 24 hours a day on Friday, with the aim of reaching agreements with companies to ensure better working conditions and wages. The previous agreement was negotiated and reached in 2014, covering approximately 500 drivers.
The secretary of the alliance, Greg Busson, stated in a statement that "the Pilbara iron ore operator has been acting in their own way for a long time." He said that the workers were "very patient and provided every opportunity for BHP to address their concerns.".
BHP Billiton did not immediately respond to requests for comment. At 2:03 pm Sydney time yesterday, its stock price fell 0.8% to AUD 45.94.
How will this unexpected event affect the iron ore market?
BHP Billiton's iron ore business in Western Australia is an integrated system consisting of four processing centers and five mines connected by over 1000 kilometers of railway and the local port of Hedland in Pilbara. In the past two years, BHP Billiton's iron ore production in the Pilbara region of Western Australia has remained stable between 250 million and 260 million tons; The average shipping volume has remained stable at around 5.4 million tons per week; The average weekly shipping volume to China is 4.68 million tons, accounting for nearly 85% of its total shipping volume. Since 2024, the average weekly shipping volume to China has also been 4.68 million tons, but recently it has remained at a level of 4.5 million tons per week. "The strike by railway train drivers this time will have a certain impact on their shipping volume. Based on the current shipping volume level, the estimated shipping volume affected by the strike in one day is 650000 tons," said Hu Wanbin, Chief Black Analyst at Huawen Futures.
"The short-term impact of this news may be more reflected in psychological expectations. On the day of the news, the main contract for Singapore's iron ore swaps rose by 0.55%. For the subsequent supply and demand impact, further tracking of the continuity of this event may be necessary. According to data released by Mysteel, the total amount of iron ore sent by BHP to China in 2023 was 243 million tons, accounting for 20.6% of the year's iron ore imports. If this event continues, it may have a significant impact on supply. However, based on observations of previous mine strikes, we believe that the duration of this event will not be too long and the possibility of substantial impact on supply is not high," said Liu Huifeng, Chief Researcher of Black Metals at Donghai Futures. ".
It is reported that in 2023, BHP Billiton shipped approximately 283 million tons of iron ore, of which approximately 243 million tons were sent to China. As of early February, the average weekly shipment volume of BHP Billiton in Australia was about 5.22 million tons, of which the average weekly shipment volume to China was about 4.51 million tons, a decrease of 190000 tons and 130000 tons compared to the same period last year, with a decrease of 3.6% and 2.9%, respectively.
Qiu Yihong, the black leader of the Investment Consulting Department of Haitong Futures, also believes that the strike activity of BHP Billiton's iron ore train drivers mainly affects the stability of Australia's iron ore supply, but the impact time is relatively short. If we look at the impact of complete 24-hour shipping stagnation, based on the weekly average shipping volume level of about 746000 tons in the first six weeks of this year, the weekly average shipping volume may drop to 5.06 million tons in the first half of February, with a year-on-year decrease of 5.4%. The impact on the scale of BHP Billiton's iron ore shipping for the whole year will be smaller. Therefore, the strike activities of BHP Billiton's iron ore train drivers may bring about short-term contractionary fluctuations in Australian iron ore shipments, but it is difficult to form a clear disturbance to the supply and demand pattern. Moreover, in the context of a decrease in transportation volume compared to last year, the overall actual impact is limited.
A spokesperson for BHP said, "We believe that no protective action is needed to reach an agreement. If the strike action continues, we have developed an emergency plan." The actual impact of the incident on supply and demand is expected to be very limited. Since the beginning of 2024, BHP has exported a total of 27061000 tons to China, with weekly exports ranging from 4.16 million to 5.58 million tons. Recently, the export volume has shown a stable but slightly declining trend.
The latest arrival volume of iron ore has seen a significant increase or decrease
On February 12th, Mysteel's latest data showed that the arrival volume of 47 ports in China was 26.955 million tons, an increase of 2.138 million tons compared to the previous month, with an increase of 8.6%. The arrival volume at Port 45 was 25.297 million tons, an increase of 574000 tons or 2.3% compared to the previous month. Among them, the arrival volume of Australian ore at the port was 14.299 million tons, an increase of 569000 tons compared to the previous month, with a growth rate of 4.1%; The month on month arrival volume of Brazilian mines decreased by 748000 tons to 6.031 million tons, a decrease of 11%; The volume of non mainstream mines arriving at the port increased by 753000 tons to 4.967 million tons on a month on month basis, with a growth rate of 17.9%. The total volume of Beiliu Port is 12.226 million tons, a decrease of 13.7% compared to the previous month. From a regional perspective, there is a significant increase in port arrivals in the Northeast and East China regions.
"The global iron ore shipment volume usually has a 2-3 week lead in terms of port arrival volume. In late January, the weekly global iron ore shipment volume rebounded from 26.29 million tons to 29.694 million tons. Based on the sea transportation time and lead period, it has basically entered a period of rebound in port arrival volume. The trend of Australian, Brazilian, and non mainstream mines arriving at ports is also relatively consistent with their respective shipping situations." Qiu Yihong.
It is worth noting that the arrival volume of some ports has significantly increased, while the arrival volume of Brazilian mines has significantly decreased. Regarding this, Chu Xinli, a black researcher at CITIC Securities Futures, believes that the number of arrivals from ports 45 and 47 has slightly increased compared to the previous period, while the number of arrivals from Brazilian mines has decreased, and the number of arrivals from Australian and non mainstream mines has increased. From a regional perspective, there is a significant increase in port arrivals in the Northeast and East China regions. The arrival volume of this period has increased from a decrease, mainly due to the oscillation of the corresponding long-term shipping volume calculated based on the shipping schedule. However, the overall arrival volume has been at a low level recently, so the arrival volume of this period has slightly increased compared to the previous period, which is a normal fluctuation. Overall, the current arrival volume has decreased to a neutral level in recent years, and there is still a seasonal weakening expectation in the first quarter.
Liu Huifeng told reporters that since February, the arrival volume of iron ore from 45 domestic ports has rebounded for three consecutive weeks. As of the week of 25-21, it was 25.297 million tons, an increase of 2.203 million tons compared to the end of January. The concentrated rebound in port arrivals is mainly due to the improvement of weather conditions in the north, which has led to an increase in port operation efficiency and a relief in port congestion. In January, the number of China Railway ore pressure vessels at the port was 158, but by the last week before the holiday, it had dropped to 144. From a seasonal perspective, the first quarter is a traditional off-season for iron ore supply. Since the beginning of the year, the weekly average global iron ore transportation volume has been 27.372 million tons, a decrease of 13.42% compared to the fourth quarter of last year; If calculated based on the shipping cycle, there may be a phased decline in iron ore supply. However, considering that the current number of 144 ships under pressure at the port is still at a historical high in the past five years, with further improvement in weather and increased efficiency of port operations, there may not be a significant decrease in port arrivals.
In 2024, iron ore will continue to show a pattern of dual increase in supply and demand
What is the supply and demand situation of iron ore in 2024, and will strikes affect the supply of iron ore? Chu Xinli believes that in 2024, global iron ore supply and demand will double increase, with supply increment exceeding demand increment. In addition, supply and demand will be tight in the first half of the year, and supply will be stronger than demand in the second half. In terms of supply, it is expected that the global iron ore supply will increase by 47.5 million tons in 2024, with an increase of approximately 32.5 million tons in overseas mines and 15 million tons in domestic mines. The increase in overseas mines mainly comes from new production projects in non mainstream mines, while the increase in domestic mines is mainly due to the production capacity of new mining projects. In terms of demand, guided by the overseas economic cycle and the investment of new steel production capacity, it is expected that the demand for overseas iron ore will increase by 24 million tons in 2024. China is still in the period of investing in blast furnace production capacity. Considering the slow recovery of terminal market demand and the high demand for steel exports, it is expected that China's iron ore demand will increase by about 8 million tons in 2024. There are currently no signs of further expansion in the strike, and it is expected to have limited impact on the supply and demand pattern of iron ore throughout the year.
From a global perspective, in 2024, iron ore will continue to show a pattern of dual increase in supply and demand, but the increase in supply will be faster than demand. In terms of supply, the four major mainstream mines will have an increase in supply of 18 million tons in 2024, of which FMG will have an increase of 7 million tons, mainly contributed by the Iron Bridge project and the Begalin iron ore project in Gabon. The increment of BHP is 5 million tons, of which Samarco contributes about 1 million tons, and the rest is mainly contributed by the South Flank project. Rio Tinto's increment is 3 million tons, mainly contributed by the increase in production of the Gudai darri project. Vale maintains its production guidance of 310-32 million tons, but the second phase of the 6 million ton annual crushing plant project is expected to be put into operation in the second half of 2024, contributing approximately 3-4 million tons of production. "From historical data, non mainstream mines are closely related to the trend of iron ore prices. With the current high ore prices, non mainstream mines have strong production expansion momentum in 2024. Based on our summary estimation of some non mainstream mining projects, the expected increase in non mainstream mines in 2024 is around 12.9 million tons." Liu Huifeng said.
The four major overseas mines are expected to increase by approximately 17 million tons in 2024, with an increase of approximately 10 million tons in shipments from non mainstream mines; To achieve a balance in the profit pattern of the black industry chain, it is still crucial to ensure the supply of raw materials. Therefore, under the promotion of the "cornerstone plan", the stable growth trend of domestic mineral resources remains unchanged, and the total supply of iron ore is likely to continue to rise at a high level. "The overseas demand for iron ore is expected to recover in 2024, but the increment is limited and there are regional limitations. The domestic production of molten iron is relatively stable at the top, and unless there is an unexpected improvement in macro and terminal demand industries, it is difficult to change the downward trend of the total demand for iron ore. The support for strong and rigid demand for iron ore will gradually weaken at the margin," said Qiu Yihong.
In terms of demand, the increase in demand in 2024 may mainly be concentrated overseas, mainly because the Federal Reserve may initiate interest rate cuts, coupled with India's industrialization and urbanization, which will promote the recovery of overseas steel supply. It is estimated that the overseas pig iron production is expected to increase by 3.6% year-on-year or 14.93 million tons next year in 2024, and the demand for this iron ore will increase by 23.9 million tons. Due to the reduction in crude steel and low profits of steel mills, domestic demand for iron ore will decrease. It is expected that the annual pig iron production will decrease by 1.39% year-on-year or 12.08 million tons, equivalent to a decrease of about 19 million tons in iron ore demand. "The supply and demand gap of iron ore in 2024 has expanded by 20-25 million tons compared to 2023, showing a relaxed overall pattern," said Liu Huifeng.
Currently, the global iron ore supply is in a new round of expansion cycle. Among mainstream countries, Vale in Brazil is currently gradually recovering its production capacity after experiencing a tailings dam accident and a significant contraction in production capacity. This year, the expected increase in production capacity is between 10 million and 20 million tons. In Australia, many new mining projects are gradually being put into operation, including the FMG Iron Bridge project, the Hardey project led by Baowu Investment, Rio Tinto's West Slope project, and BHP Billiton's South Slope project. Among non mainstream countries, the Guinea Simandou project, jointly developed by mining companies such as Weiqiao Group, Rio Tinto Group, and China Aluminum Corporation, is considered the world's largest undeveloped high-quality iron ore deposit, with an estimated reserve of 2.4 billion tons of iron ore with a grade of 65%. The project is expected to start production in 2025, with a designed annual production capacity of 100 million tons. "Overall, global iron ore production capacity has gradually entered a new round of capacity expansion cycle with the increase of mining capital expenditure in recent years, and iron ore supply is expected to show a gradual growth trend. The impact of this strike on global iron ore supply in 2024 is relatively small." Hu Wanbin said.
Is it difficult to change the weak situation of mineral prices?
Since mid January, the daily average iron production of domestic blast furnaces has been rising for five consecutive weeks, with a cumulative increase of 59100 tons. From a seasonal perspective, it is highly likely that the daily iron production will continue to rise after the Spring Festival holiday. Meanwhile, it is understood that some steel mills may consider replenishing the ore inventory consumed during the holiday period after the long holiday. And the first quarter is the traditional low point of supply. In addition, there is still a discount of around 80 yuan/ton between the 2405 contract and the market, and the current macro expectations are still preferred. So after the long holiday, there may still be room for an increase in the market price, but the spot price of $130 is relatively high in both absolute and relative valuations, and it is unlikely to continue to rise. "But after entering March, the steel market will face peak season demand verification. We believe that the demand is likely to be lower than expected, and steel mills may reduce production again due to losses. If there are macro level bearish conditions again, iron ore prices may face significant adjustment pressure," said Liu Huifeng.
Qiu Yihong told reporters that before the Spring Festival, long and short process steel enterprises were basically in a comprehensive loss pattern, which may have certain constraints on the enthusiasm of steel enterprises to recover production after the Spring Festival. Therefore, it is unlikely that there will be a significant increase in demand for iron ore, and it is likely to maintain a stable but slightly increasing trend. If other mines are shipped normally, the strike of BHP Billiton iron ore train drivers may increase the difficulty of recovering supply after the holiday, which is expected to drive the high level of iron ore arrival at port to fall after the year. The supply and demand gap of iron ore is also likely to continue to be tight, and the overall iron ore price support after the holiday may be stronger than pressure.
"In the short term, the weak situation of ore prices is difficult to change. On the supply side, the overall iron ore supply has turned from strong to weak in recent years, and the near end arrival volume has decreased to a neutral level in recent years. The far end shipment volume has shown a neutral and weak performance, and there is a seasonal weakening expectation in the first quarter. On the demand side, the increase in molten iron production has slowed down, steel mills have suffered serious losses in profits, and the downstream demand outlook is less clear. On the inventory side, steel mills' inventory is marginal bearish, and port inventory is operating at a low level. Short term ore prices are still treated with a bearish mentality." Chu Xinli said, focusing on market demand and macroeconomic expectation guidance after the holiday. The post holiday market is about to usher in the traditional downstream demand peak season of the March Two Sessions and the "Golden Three Silver Four", coupled with seasonal decline in shipping, resumption of blast furnace production in steel mills, and policy expectations for the Two Sessions, which will provide certain support for iron ore prices. From the perspective of supply and demand pattern, the iron ore market is tightening after the holiday, with inventory still low and basis at a high level in the same period in recent years. If downstream demand or macro expectations improve, it is possible to consider the opportunity to lay out multiple orders on the 2405 contract on the right side for bargain hunting.
"At present, the overall steel mills are still in a state of deep losses, with iron ore production at a relatively low level during the same period, while the overall iron ore supply is at a high level during the same period, leading to a relaxed state of iron ore supply and demand. Inventory continues to accumulate, and the pressure on iron ore prices is gradually increasing. On the other hand, the current macroeconomic policy's countercyclical adjustment is still strong, and there is a strong expectation of improvement in demand for black commodities, which also forms a certain supporting effect on iron ore prices. Overall, it is expected that iron ore will show a stage of oscillation and strength driven by finished products after the holiday. In the long run, there is strong supply and demand pressure on iron ore prices, which needs to be digested." Hu Wanbin said.