Home / Metals / Push to flood iron ore market crushes smaller suppliers
Stainless Steel Flanges

Push to flood iron ore market crushes smaller suppliers

Reuters reported that a faster than expected increase in iron ore production by the world’s biggest miners in Australia and Brazil this year is pushing less efficient smaller suppliers of the steel making raw material to the edge.

From Europe to Australia to the Middle East, smaller miners in the once lucrative iron ore business are cutting output or shutting altogether despite rising demand, while a few mega miners are taking a bigger share of the USD 130 billion seaborne iron ore market.

Big miners such as Vale, Rio Tinto and BHP Billiton are flooding the world with hundreds of millions of tonnes of cheaply mined ore, driving down prices by almost a third this year.

The price fall is squeezing higher-cost producers, while the big miners are feeling less pain due to ever lower costs of production from economies of scale and increased sales. Barriers to entry are also increasing, shutting out all but those with access to the biggest ore deposits.

Mr Gavin Wendt of Australian consultancy MineLife said that “Iron ore is fast becoming a big boys game, with little room for the small or marginal producer.”

According to Australian government data, by 2015, major producers in Brazil and Australia will account for 1.15 billion tonnes or 83% of world seaborne ore trade up from 71% just three years earlier.

Mr Ken Brinsden MD of Australia’s 12 million tonnes per year Atlas Iron said that “Unprecedented iron ore output from the majors could strip away up to 85 million tonnes of iron ore annually from suppliers in China and elsewhere.”

Mr James Wilson a mining analyst with Morgans Stockbrokers estimated that at today’s prices, around 200 million tonnes of Chinese domestic production alone is unprofitable. The likes of BHP and Rio Tinto are just too competitive to take on in this market.

Macquarie Bank research shows use of domestic ore by Chinese steel mills fell to 241 million tonnes in the Q1 of 2014, down 40 million tonnes the fourth quarter of last year. That’s not surprising, given only a third of China’s domestic mines have direct links with the mills, leaving the majority to compete in the price driven marketplace.

The big miners, meanwhile, are beating forecasts as they churn out more ore. BHP expects to produce 245 million tonnes this year, up 9% on last year and well ahead of expectations.

Rio Tinto is also boosting output 9% to 290 million tonnes this year, which analysts say could set the stage for a drive to its next goal of 360 million tonnes. Vale is aiming for 312 million tonnes and produced a record amount in the Q2 to June 30.

Source – Reuters

(www.nctv.net)

About www.nctv.net

www.yaang.com provide a wide range of steel products as Steel pipe, Steel pipes and seamless pipes, Alloy pipes, Pipe fittings, Composite steel pipe used in the industry, construction etc.

Leave a Reply

Your email address will not be published. Required fields are marked *

*

Scroll To Top