October 18, 2017

Expect more iron ore to flood the market – Unctad report

While other metal producers have scaled down production, we are likely to see more iron ore on the market for years to come on the account of mining companies in Australia and other parts of the world insistence on continuing production, the United Nations Conference on Trade and Development (Unctad) predicts in its report.

In the report, titled “Iron Market Report 2015”, Unctad warns that a supply overhang will prevent prices from, in its words, “rising above a certain level”. The global iron-ore market has entered a new phase of lower prices, slower growth and squeezed margins for mining companies, it states.

The investment path which mining giants, Vale, Rio Tinto and BHP Billiton, would pursue would be a key price determinant, says Unctad, expecting them to be cautious in their approach.

Further, the realignment of China’s economic strategy is likely to lead to lower steel demand than had been the trend in the last decade.

Steel production volume is proportional to iron ore production. Global steel production decreased by 2.9% year-on-year in 2015 to an estimated 1.76-billion tonnes. Global iron-ore production, which had expanded 2.05-billion tonnes in 2014, decreased in 2015, with global output reaching 1.95-billion tonnes

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