Global iron ore long-term outlook Q1 2020 Report

Commodity Market Report 31 March 2020

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Report summary

Iron ore fared better than most industrial metals in the immediate aftermath of the coronavirus outbreak. But there is no escaping the devastating impact the pandemic will have on global steel markets and the inevitable flow through to iron ore. Our working assumption (based on a highly volatile situation) is for a more pronounced down-cycle for iron ore (than our pre-virus forecast), reaching its nadir in 2023. Read our latest global iron ore long term outlook for details on our base case view and key risks impacting seaborne iron ore supply, demand and price.

What’s changed since Q4-19?
- Price forecast:
- Key demand revisions:
- Key supply revisions:
Overview
Asia
- China
- Moderate crude steel production drop in 2020
- Smaller drop in hot metal production and thus iron ore demand
- Iron ore demand from 2020 onward
India
Japan
South Korea
Taiwan
Indonesia and Vietnam
Other Asia
Europe
EU and the UK
Turkey
CIS
Russia
Ukraine
North America
United States
Mexico
Canada
South America
Brazil
Other South American countries
Australia
Middle East and North Africa
Iran
Algeria
Egypt
Africa
South Africa
Overview
- Key trends by product type
- Sinter fines
- Pellet feed
- Lump
- Pellet
Regional analysis: key changes to our forecast
- Australia
- Brazil
- Chile
- Peru
- Venezuela
- Canada
- United States
- Liberia
- Mauritania
- Sierra Leone
- Congo
- South Africa
- Europe
- Russia
- Ukraine
- China
- India
- Asia (excluding China and India)
- Iran
- Revised market balance and price outlook
- Long term outlook (no change to price forecast, despite a more closely balanced market)
- Fe grade price spreads (down then up)
- Dry bulk freight outlook – uncertain times!
- Key "swing factors" that could significantly impact the long-term view:
- Price outlook for lump
- Past trends in lump premia
- Future trends in lump premia
- Price outlook for pellets
- Past trends in pellet premia
- Future tends in pellet premia
The Long-Term Outlook (post-2025)
- Methodology
- Long run trade balance
- Long run incentive price
- Australia
- Brazil
- China
- India
- Indian reserves and production
- Key Indian producers
- Indian policy framework
- Africa
- Canada
- Russian Federation/Ukraine/Kazakhstan
- Sweden
- Chile
- Peru

Tables and charts

This report includes 49 images and tables including:

Key demand forecast data
Japan is responsible for 5% of global iron ore consumption
and imports 10% of global fines supply

Indonesia: We expect the relatively rapid increase in iron ore consumption seen over the last five years to continue in the long-term
Vietnam: The rapid expansion in iron ore consumption seen over the past two years will begin to cool from the mid-2020s
Europe: key demand forecast data
EU28 is responsible for 8% of seaborne iron ore imports
but imports 32% of global pellet imports
Turkish blast furnace iron ore consumption has the potential to grow in the medium term as new hot metal producing assets are commissioned
Turkish domestic iron ore supply currently satisfies around one-third of domestic demand but as demand rises that share will fall to around one-quarter
Key demand forecast data
North America: key demand forecast data
Canadian iron ore consumption will fall in 2020 then gradually increase.
Canada produces pellets and is an exporter of pellet feed.
South America: key demand forecast data
Brazil is the dominant consumer of iron ore in South America, by some margin but is only responsible for 2% of global iron ore consumption and sources ore domestically
Venezuelan iron ore consumption has been all but eradicated by conflict and political instability. Our base case is for a recovery but there is downside risk to this view
Middle East and North Africa: key demand forecast data
The Middle East is not a major global iron ore consumer or importer
But is responsible for 16% of seaborne pellet feed imports and 11% of global pellet imports
The DRI sector is the main iron ore consumer in Iran and will increase its proportion of the total in the long-term
Domestic iron ore supply satifies most of Iranian demand. Export volumes will decline in the future
Algeria will import 100% of the pellet feed required to produce DR grade pellets...
...and will be required to import pellet to top-up domestic pellet production to meet demand
DRI is the favoured technology in Egypt
Improved gas availability and lower gas prices will drive higher DRI output
Iron ore production and exports by major country
Iron ore exports by key company
Global seaborne trade
China key demand data
Forecast year-on-year change (2019-2020) - flow through from finished steel through to iron ore.
Forecast year-on-year change in iron ore supply and demand.
Long-term China iron ore forecast (Dry basis, 62% Fe equivalent)
Asia (ex-China): key demand forecast data
Cumulative % of mines production at different price levels
Contestable Private Production at different price levels (Wet tonnes)
India - iron ore production by company
Price and cash cost, by percentile (contestable market, CFR China)
Iron ore price (historical perspective)
Cost changes to key iron ore routes*
Dry bulk trade outlook
Iron ore lump premium
Iron ore trade balance
Imports - China down, India up!
Project incentive curve (basis 62% Fe fines, CFR China)
Incentive price analysis – selected projects
China - LTO mined iron ore supply
2019 average metallics consumption and ferrous waste generation in China
Demand for iron ore