World trade in iron ore in 2023 was 1.6 billion tons
The global iron ore market is set to undergo a major upgrade in the near future, with a surplus forecasted by the end of the decade. This is reported by BigMint.
The world’s largest untapped high-grade Simandou iron ore deposit in West Africa is expected to be commissioned by the end of 2025 or early 2026,
This year, global iron ore production is expected to grow by 2% y/y, to over 2.5 billion tons. Global sea trade in this commodity last year amounted to about 1.6 billion tons. In 2024, ore production in South Africa will amount to about 67 million tons, while last year the region’s exports of this product amounted to about 60 million tons.
With the start of production at Simandou, African seaborne iron ore exports are expected to grow rapidly – by more than three times by 2028-2030, according to some estimates.
The deposit is divided into four blocks. WCS (45% controlled by Singapore’s Winning International Group and 35% by Weiqiao Aluminum, a unit of China Hongqiao Group) owns 85% of the shares in the northern part of Simandou – blocks 1 and 2. The southern part of the project, blocks 3 and 4, is being developed by the transnational corporation Rio Tinto and a joint venture of China’s Chinalco, Baowu, China Rail Construction Corporation, and China Harbor Engineering Company.
At the same time, Rio Tinto has announced that production at Simfer (a joint venture between the Australian-British concern and Chinese companies) will be increased to 60 million tons per year within two and a half years. At the same time, Macquarie analysts believe that the entire Simandou project will produce only 5 million tons in 2025, but closer to 75 million tons in 2027 and 90 million tons by 2028.
BigMint, citing sources, notes that Simandou’s collective production could grow to more than 100 million tons by 2030.
In this scenario, the maritime ore supply market will inevitably experience a surplus by 2030, given that new mines in Australia and Brazil may start production. Rio’s joint venture with Baowu, Western Range in Australia, is currently 70% complete and will produce first ore in 2025. The reserve mines West Angelas and Hope Downs are expected to start production in 2027, and Brockman 4 in 2028. Brazilian mining giant Vale has also announced expansion projects.
Oversupply in the global maritime market is expected to have a negative impact on ore prices. High inflation and interest rates around the world are weighing on demand for commodities, and China’s steel capacity cuts could increase the surplus.
According to global think tanks, iron ore prices could fall to $70 per tonne for raw materials with 62% iron content by the end of this decade.
HSBC Holdings, a British international commercial bank, expects iron ore prices to reach $100 per tonne in 2024. Capital Economics predicts that quotes for this raw material will range from $99-100/t. By the end of next year, iron ore prices will fall to $85/t.
Read more: Hyundai Steel expands its low-carbon steel sales network
Vietnam Steel by Hoa Sen Group
