Iron Ore Market
Global iron ore reserves in 2017
The global iron ore market remains highly consolidated with four leaders (Vale, BHP Billiton, Rio Tinto, and FMG) accounting for over two-thirds of global iron ore sales. The leading countries producing commercial iron ore are Australia, Brazil, China, India, and Russia, altogether they account for over 81% of global output.
Global iron ore output grew by 2.8% year-on-year in 2017, totalling 2,095 million tonnes. Production grew in India, Australia, Brazil, as well as China, which had seen a decline in output in 2016. In Russia, supplies of iron ore products to the market declined by 3.4% in 2017 due to the launch of HBI-3 Plant at Lebedinsky GOK.
According to AME Research, global iron ore consumption in 2017 amounted to 2,068 million tonnes. Demand for iron ore raw materials grew by 3.6% year-on-year globally in 2017, while in Europe demand grew by 4.3% year-on-year. According to Russian industrial agency Rudprom, iron ore demand in Russia increased by 2.2% year-on-year. China remains the leading consumer of iron ore products, accounting for 58.5% of the global demand in 2017. China also remains the largest steelmaker and consumer of raw materials (including iron ore) worldwide.
Iron ore output and consumption by country and region million tonnes
|350||283||229||209||227||China||1 165||1 191||1 155||1 174||1 210|
|60||56||57||54.4||59||North America |
(excluding the USA)
|31||33||36||32||33||Central and South America |
|130.6||114.1||76.1||70.2||74.8||Rest of the world||142.9||155.9||155.6||158.9||176.6|
Metalloinvest performs regular assessment of factors influencing the iron ore raw materials market for the purpose of mid-term and long-term growth planning. The Company’s management expects global demand for iron ore to continue growing over the medium term with the key drivers being growth in GDP and steel output in developed economies, as well as emerging markets, primarily in China.
The long-term trends in the global iron ore market are defined by increased supply of iron ore with low iron content. Lower quality raw materials increase steel production costs and lead to higher pollutant emissions by steelmakers. At the same time, environmental requirements are becoming more stringent, particularly in China, which implies reduction of harmful environmental impact of the country’s steelmaking facilities. This is being achieved, in part, by improving the quality of iron ore raw materials consumed in the country.
The stricter environmental requirements in the ferrous metals industry and the lower quality of iron ore raw materials have led to a premium on raw materials with high iron content.
The high volatility of global iron ore prices constrains investment in commodity assets worldwide, although major global iron ore producers have begun investing in improving the ore quality.
Iron ore prices
(CFR China Spot, 62% Fe)
In 2017, the average annual iron ore price grew from USD 57.5 to USD 70.9 per tonne CFR China. The fundamental drivers of the global price growth were stricter environmental requirements and closure of outdated steelmaking capacities in China. This led to an increase in demand for quality iron ore raw materials in the country, as well as to growth in pig iron and steel output in the majority of regions around the world, amid a moderate growth in iron ore supply.
At present, a number of industry news agencies such as Argus, Platts, The Steel Index, Metal Bulletin, Mysteel, and SteelHome provide the latest and most accurate information on spot prices of iron ore raw materials using indices. The transition to pricing based on various index baskets continues as price-related information becomes more accessible. Metalloinvest monitors commodity markets on a daily basis, as well as commodity trading across global commodity exchanges.
Metalloinvest owns the world’s second largest proven iron ore reserves (14.1 billion tonnes3 under JORC standards) and is the largest producer and supplier of iron ore products in Russia and the CIS. Metalloinvest was ranked fifth globally by commercial iron ore output in 2017.
The Company is a global producer of beneficiated iron ore products, processing most of its primary iron ore concentrate into high value-added products, such as high-quality iron ore concentrate, pellets, and HBI/DRI.