Chinese iron ore miners face cheaper imports
May 8, 2014 Category Automotive Metals & Minerals, Metals
Surging global supplies of seaborne iron ore are expected to force some higher-cost Chinese miners to close, according to BHP Billiton. Low-cost output by miners in Brazil and Australia will displace marginal suppliers in China, Michiel Hovers, Vice President of iron ore marketing at BHP, told an industry conference. Vale, the world’s biggest iron ore producer, plans to raise output by almost 50% by 2018, Claudio Alves, Director of Marketing and Sales, told the gathering in Singapore. The biggest producers, including Vale, BHP, Rio Tinto Group and Fortescue Metals Group, have invested billions of dollars to expand output, betting on sustained growth in demand from China, the biggest buyer. Iron ore fell into a bear market in March amid forecasts of a global glut. Fortescue wouldn’t cut output even if prices extend declines as its costs are low, Zhuang Binjun, Business Development Manager, said. Ore with 62% content delivered to Tianjin has fallen 21% so far this year to USD106 a ton, according to data from The Steel Index. The benchmark fell to USD104.70 on March 10, the lowest level since 2012. While prices may be firmer over three months, there may be a drop below USD100 over six months, toward USD90, on the new supplies, Kamal Naqvi, global head of metals at Credit Suisse Group, told the conference. If prices drop to USD100, output in China may be hurt as domestic mines with high production costs are forced to cut output or close, according to the Bureau of Resources and Energy Economics, Australia’s government forecaster. By comparison, Rio Tinto can be profitable above USD36 and BHP’s break-even is USD38. Global seaborne supplies will increase 126 million tons to 1.38 billion tons this year, Morgan Stanley estimated in a May 5 report. That will increase the worldwide surplus to 79 million tons in 2014 from 1 million last year, the China Daily reports.
- KURT VANDEPUTTE (UMICORE) APPOINTED CHAIRMAN OF THE BOARD OF THE FLANDERS-CHINA CHAMBER OF COMMERCE (FCCC)
- Webinar: “Knowing Your Chinese Partner” – May 26, 2021, 10 am – 12 am
- EMA starts rolling review of CoronaVac, WHO approves Sinopharm vaccine for emergency use
- The Global Times warns not to politicize the Comprehensive Agreement on Investment (CAI)
- Hainan to become biggest duty-free market in the world