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Iron Ore

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CATEGORY ALERTS

Anshan city in China to increase its Iron ore mining

April 19, 2023
alert level: Medium
CATEGORY ALERTS

J. Mendes Group of Brazil expands its iron ore operations

April 13, 2023
alert level: Medium
CATEGORY ALERTS

NMDC's iron ore output declined in FY 2022-2023

April 06, 2023
alert level: Medium

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Iron Ore Market Monitoring Dashboard


Price Trend
129.25
Apr-24
USD/MT
History Forecast

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Iron Ore Industry Benchmarks


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The average annual savings achieved in Iron Ore category is 6.70%

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(in days)

The industry average payment terms in Iron Ore category for the current quarter is 90.0 days

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    Iron Ore market report transcript


    Iron Ore Global Market Outlook

    MARKET OVERVIEW

    Global production: 2,435 MMT (2023 E)

    In recent years, the Russia–Ukraine war and outbreak of covid and lockdowns in China, due to its “Zero-COVID” policy, have disrupted the supply chain further.

    Market Drivers

    Downstream demand

    Steel production output

    • China will likely use more scrap material/higher grade iron ore in steel production, in order to restrict the carbon footprint from blast furnaces, and it will diminish demand for imported lower–mid grade iron ore in the long run

    • The Russia–Ukraine war, outbreak of the Coronavirus in China, and associated lockdowns, due to the zero-COVID policy, unstable trade relations, and tariffs have affected the steel demand, and the volatility is expected to persist in 2023. However, the steel production levels in China in the long term are expected to drop, as the country pushes forward with reducing its overcapacity and decarbonization goals.

    Iron Ore Market Overview: Global

    • China, the world's largest iron ore consumer and importer, recorded imports of iron ore at 1.10 billion tons in 2022, down 1.5 percent y-o-y. The shipments have declined, as a result of inclement weather in Brazil and disruptions in trade flows in the steelmaking raw material after Russia's invasion of Ukraine. Brazilian miner, Vale (South Africa), had temporarily halted its iron ore train operations in Carajas mine in early 2022, due to heavy rain.

    • The overall dip is due to the drop in demand from steelmakers, as steel production took a hit, due to the zero-COVID policy and associated lockdowns from the Chinese government in the earlier months. China is keen to reduce its reliance on imports and in the long run by 2025, it is expected to reduce its imports by nearly 71% led by great steel scrap usage in addition according to the Metallurgical Mines’ Association of China.

    • The China Iron and Steel Association (CISA) proposed a cornerstone plan early this year, suggesting an increased investment in domestic mines. The plan aims to increase iron ore concentrate output to 370 million tons in 2025, which would be an increase of 100 million tons from 2020

    • With the goal of reducing CO2 emissions, the use of steel scrap is about the development of an entire industry. This is the biggest reason that China started purchasing scrap imports this year. The re-emergence of China as a key scrap buyer in the import markets is also likely to boost the Japanese scrap market

    Porter’s Five Forces Analysis on Iron Ore Market

    Supplier Power

    • Supplier power is medium to high, as the currently supply disruptions across the globe has strengthened the supplier power

    • Increased use of ferrous scrap and high-grade iron ore moving forward in line with the push for decarbonization of the sector especially in China will put a damper on the lower-mid grade iron ore prices and the supplier power in the near future.

    Barriers to new entrants

    • Barriers to new entrants in the iron ore market are high. Large investments and capital is required to establish a new mine

    • Furthermore the iron ore industry is heavily regulated by the government and getting permits to being operations is a daunting task

    • Negotiating rail and port access with established miners

    Intensity of rivalry

    • Intensity of rivalry is low-medium, due to consolidation in the industry amongst the major players. There is high investment cost for entry, regulations, and high exit barriers

    • The struggle for market share and increased profitability is reflected in price competition where large scale operations benefit

    Threat of substitutes

    • Threat of substitutes is low-medium, as ability to alter the properties to suit the end-use industry by different process is already prevalent in the market and metals produced through iron ore have the capability of being recycled. Although there is a shift towards increased used of ferrous scrap and higher grade of iron ore for lowering the carbon footprint. The use of iron ore for steel making is very unlikely to completely eliminated even in a decarbonized environment.

    Buyer power 

    • Buyer power is medium, depending on the end-use industry, as the level of demand varies across the industries with the steel industry contributing the higher share in iron ore demand.

    • The buyer power also fluctuates depending on the macroeconomic circumstances. For instance, the market volatility in 2022 and supply chain disruption caused by the Russia-Ukraine war, the covid outbreak in China, the earthquakes in Turkey etc. disrupted the market.

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