Abstract
Production being consumed by the burgeoning steel industries
Over the last decade iron ore production has increased by 5.3%pa, but the main
explosion in output has occurred since 2001 with an AAGR of 9.7%. Iron ore
production exceeded 1,400Mt in 2006 with much of this total being consumed by
the burgeoning steel industries in China, India, Russia and Ukraine. These
economies are in a rapid industrialisation period where consumption of steel
is driven by the need to build new infrastructure. In mature industrial
economies the demand for steel grows at a much lower rate and is even in
decline in some countries.
While most iron ore is consumed directly in the production of steel in
integrated steel works, the last decade has seen a significant increase in the
production of merchant pig iron and DRI. Steel makers are increasingly turning
to these resources in the face of limited scrap availability. This occurs
particularly in countries undergoing rapid industrialisation, such as India,
the largest producer of DRI, where output reached 14.7Mt in 2006.
The key trends, issues and developments in the market are now analysed in this
major new report from Roskill. It provides a clear insight into all areas of
the industry and an authoritative analysis of the prospects for the future.
What the report gives you
- Forecasts for end-use consumption, world supply and demand
- Independent research and analysis from industry experts
- Essential market intelligence for successful business planning
- Detailed survey of production in 76 countries
- Up-to-date profiles of major production companies and their activities,
including CVRD, BHP Billiton, Rio Tinto, Metalloinvest, Evraz, LKAB, Kumba and
Smart Group
Report highlights
Asia is a leading producing region, closely followed by South America and
Oceania. China, India, Brazil and Australia represent the largest producing
countries in these regions. Three large companies dominate production: CVRD,
Rio Tinto and BHP Billiton, which between them control 34.7% of world output.
More importantly they control 78.2% of seaborne trade and therefore exerted a
large measure of control over world markets in 2006/7. Consumers now have a
choice of fewer suppliers than in previous decades and their bargaining power
has thus been diminished. Global iron ore production has increased strongly
since 2001 to meet rising demand from Asian steel industries, particularly in
China and India. To date, this new capacity has resulted in a small surplus in
the supply demand balance but there is now very little room for manoeuvre in
the market.
A new generation of iron ore projects is now coming on-stream in Australia,
South America, Western Africa, South Africa, Eastern Europe, the Middle East,
China, India and other parts of Asia. Some of these projects are wholly or
partially integrated with steel makers and others are independent of the major
mining companies. Chinese steelmakers are investing heavily in iron ore
projects overseas. This increasing trend will allow China to have a stronger
control over raw material prices and seaborne trade. China is also, along with
India, developing a number of new domestic projects to decrease dependence on
high-cost imports.
Australia and Brazil will continue to be the main areas of growth, with
exploration and development proceeding in those countries on a scale unmatched
elsewhere in the world. New areas of exploration include West Africa and South
America, which are likely to see deposits brought on stream in the near future.
Contract prices for iron ore are likely to increase by 50% in 2008. The large
number of mining projects planned for the next few years could result in some
price deflation by 2010.
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