After rising throughout most of 2016, iron ore prices have fallen sharply this year, but the market has now turned.
Iron ore prices have bottomed out after a sharp four-month correction following the significant price rises recorded in 2016. In its inaugural Commodity Briefing Service (CBS) report on iron ore, S&P Global Market Intelligence examines the prevailing market conditions.
The CBS report follows recent publication of "The Iron Ore Market 2017" by The United Nations Conference on Trade and Development (UNCTAD). Material for this report, which examines the market for iron ore in 2016, was provided by S&P Global Market Intelligence.
S&P Global Market Intelligence notes that iron ore stocks remain elevated but are now stable. The July CBS report on iron ore highlights the mixed H1 2017 output from the "big four" producers, with Vale and BHP recording year-over-year increases of 8.3% and 4.7%, respectively, but falls of 2.0% and 1.3% from Rio Tinto and Fortescue Metals Group.
The UNCTAD report examines last year's marked improvement in iron ore markets after the slower growth, lower ore prices and squeezed profit margins that the industry suffered in 2015. Writing in the UNCTAD report, S&P Global Market Intelligence comments that although Chinese consumption remained relatively low, iron ore prices started to improve in the second half of 2016.The UNCTAD report concludes that global iron ore production reached 2,106 Mt in 2016. This was primarily driven by an additional 30 Mt of direct shipping ore from Australia, which was the major source of new fine-products entering the Chinese market. Iron ore exports were around 1,513 Mt in 2016, compared with almost 1,439 Mt in 2015, and the seaborne market was more or less balanced for 62% Fe material.
According to its mine operating-cost models, S&P Global Market Intelligence estimates that the iron ore mining industry as a whole now spends US$22/dmt less than it did in 2013. This is attributed to tightened capital controls, renegotiated contracts and the exit of high cost supply. The production-weighted average cost for the seaborne market was only US$34/dmt in 2016, as outlined in the UNCTAD report.
The Iron Ore Market 2017
For details of the UNCTAD report, and ordering information, click here.
Iron Ore Database
The same link provides information on UNCTAD's data, from 1970 to end-2016, on iron ore producing companies and countries. The statistics include data on:
- Production by country
- Iron ore
- Pig iron
- Crude steel
- Direct reduced iron
- Pellet capacity, production and exports
- Exports and imports of iron ore
- Iron ore prices in Europe and Japan
- Freight rates for iron ore on main shipping routes
Turn our iron ore market analysis into strategic investment decisions, download our July’s issue of the Commodity Briefing Service: Iron Ore report for more perspective.