Commodity Market Report

Global iron ore long-term outlook Q3 2019

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Why buy our latest quarterly iron ore report?

You'll get in-depth analysis of the key market drivers and risks influencing the global iron ore market in the short and long term.

We unpack the impact of the Brazil tailings dam tragedy on supply and pricing, when we can expect a return to “normality’ for the sector and when Australian producers are expected to recover.

You’ll get:

  • Iron ore price forecasts and analysis of the factors that will influence price to 2040
  • Supply, demand and market analysis from our global team of experts
  • Access to the analysts who produced this report to understand what the analysis could mean for your business.

This report comes with datasets and charts, quantifying changes in supply, demand, production, pricing and more, for every major region. Scroll down to see the full table of contents.


25 September 2019

Global iron ore long-term outlook Q3 2019

Report summary

2019 will be a landmark year for iron ore. Global seaborne trade is on track to register its first annual decline for almost two decades. The driver is lack of supply rather than lack of demand. The result is high prices. The benchmark 62% Fe sinter fines index for CY 2019 should come in comfortably above $90/t CFR; that’s 30% higher than we expected at the start of the year (pre-Brumadinho tailings dam tragedy). We are confident that 2019 will mark the peak of iron ore’s current mini-cycle, but the return to “normality” will be a gradual process. No change to our price forecast for 2020 and 2021: $80/t CFR and $75/t CFR respectively. The key change of view this quarter relates to the period 2022-24 when we are now forecasting a more pronounced down-cycle because the implied market surplus has increased. We forecast the low point for prices at US$60/tonne (CFR China, real 2019 terms) in 2023. Our long term price forecast is unchanged at $65/t CFR (real terms).

Table of contents

    • China – peak hot metal production in 2020
    • India – growth in seaborne imports will offset Chinese declines
    • EU28 – barring a major intervention, EU hot-metal production will be in terminal decline
    • China
    • Hot metal production
    • Hot metal versus scrap
    • Hot metal capacity
    • Blast furnace burden change
  • India
  • Japan
  • South Korea
  • Taiwan
  • Indonesia
  • Vietnam
  • Other Asia
  • Europe
  • EU28
  • Turkey
  • Russia, Ukraine and Kazakhstan
  • 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
    • Global seaborne supply
    • Key trends by product type
    • Sinter fines
    • Pellet feed
    • Lump
    • Pellet
    • Australia
    • Brazil
    • Chile
    • Peru
    • Venezuela
    • Canada
    • Liberia
    • Mauritania
    • Sierra Leone
    • South Africa
    • Europe
    • Russia
    • Ukraine
    • China
    • Key changes to forecast methodology
    • Changes to our forecast
    • A short-lived supply increase in 2019...
    • ...followed by an inevitable downward trend 2020-2028
    • Long-term supply to stabilise at around 120 Mt
    • India
    • Asia (excluding China and India)
    • Iran
    • Short term up; medium term down
    • Steel margin compression weighs on high grade market
    • Short term outlook: no change to 62% fines; downward revision to high grade premium and direct charge ore
    • Medium term outlook: down cycle expected in 2022-24 due to looming market surplus
    • Long term outlook (no change – despite a more closely balanced market):
    • Fe grade price spreads (down then up)
    • Key ''swing factors'' that could significantly impact the long term view:
    • Dry bulk freight - impact of IMO 2020 (upside price risk):
    • Constraints on seaborne iron ore supply post-Brumadinho (upside price risk)
    • Falling Chinese domestic ore supply (upside price risk)
    • Lack of appetite for investment in major greenfield projects (upside price risk)
    • China's ''Asian dream" (upside price risk)
    • Chinese hot metal production– close to peak? (downside price risk)
    • India's iron ore sourcing (downside price risk)
    • Price outlook for lump
    • Past trends in lump premia
    • Future trends in lump premia
    • Price outlook for pellets
    • Past trends in pellet premia
    • Future trends in pellet premia
    • Methodology
    • Long run trade balance
    • Long run incentive price
    • Australia
    • Brazil
    • China
    • India
    • Indian reserves and production
    • Key Indian producers
    • Indian policy framework
    • Outlook for Indian iron ore
    • Africa
    • Canada
    • Russian Federation/Ukraine/Kazakhstan
    • Sweden
    • Chile
    • Peru

Tables and charts

This report includes 51 images and tables including:

  • Key demand forecast data
  • Japan is responsible for 8% of global seaborne iron ore imports
  • and imports 12% 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
  • Around 25% of total iron ore consumption in the EU is pellet feed for pellet production. Pellets are typically consumed within the EU
  • Blast furnace iron ore demand will flatline in the medium term and be in permanent decline from the mid-2020s
  • EU28 is responsible for 8% of seaborne iron ore imports
  • but imports 31% 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 next year and then stay broadly flat – but the proportion consumed by hot metal producers will fall at the expense of DRI consumption
  • Canada consumes domestically produced pellet feed to make pellets – 80% of which are exported. Canada sources 80% of its pellet demand from imports
  • Why do Canadian iron ore consumers source iron ore from outside of the country?
  • South America: key demand forecast data
  • 75 Mt of iron ore will consumed in Brazil this year, growing to 11 Mt in 2040...
  • ...but the pellet feed consumed is used to make pellets – the majority of which is destined for the export market
  • 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 the domestic pellet production to meet demand
  • DRI is the favoured technology in Egypt
  • Iron ore consumption for DRI production will remain between 9 and 10 Mt throughout our forecast
  • Iron ore production and exports by major country
  • Iron ore exports by key company
  • China key demand data
  • What contributes to our hot metal forecast change in the long-term?
  • Asia (ex-China): key demand forecast data
  • China's domestic supply change – up in the short-term but down in the long-run
  • A short-lived increase in 2019, but an inevitably downward trend afterwards
  • Iron ore price forecast revision
  • Iron ore prices and cost percentiles
  • Iron ore price (historical perspective)
  • Iron ore price spreads (recent trends)
  • Iron ore price spreads (forecast)
  • Cost changes to key iron ore routes*
  • Bunker fuel mix assumptions
  • Iron ore lump premium
  • Blast furnace pellet premium
  • Iron ore trade balance
  • Imports post-2020: China down, India up!
  • Project incentive curve (basis 62% Fe fines, CFR China)
  • Incentive price analysis – selected projects

What's included

This report contains:

  • Document

    Global iron ore markets long-term outlook data 2019 Q3.xls

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    Global iron ore long-term outlook Q3 2019

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