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Commodity Market Report 31 March 2022

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Report summary

With global pig iron production on track to remain close to last year’s record high and iron ore supply chains stretched, 2022 is shaping up to be another tight year for seaborne iron ore. We have raised our CY 2022 price forecast by 50% to $135/t CFR. No change to our view that prices will trend lower over the next five years in anticipation of easing supply constraints and stagnating/declining Chinese demand, but we have moderated the timing and scale of the future price "correction". We have raised our long term (mid-cycle) price to $75/t CFR (real 2022 terms) versus our previous forecast of $70/t. The driver is primarily “cost push” rather than “demand pull”. Rising energy, labour and other input costs all play a role, along with heightened geopolitical risk and rising ESG compliance costs. Our current assessment of iron ore market dynamics and long term price outlook are presented in this report.

What’s changed since Q4 2021?
- Overview
- Demand revisions
- Supply revisions
The five-year view - what’s changed?
- Seaborne Trade
- Price Forecast
Simplified market balance and implied clearing price:
Price versus costs
Premiums and discounts
Price outlook for lump
Price outlook for pellets
The long term outlook (post-2026)
- Forecasting rationale
- Long term price forecast raised to $75/t CFR (previously $70/t)
- Incentive price analysis
- Key swing factors that could impact the long-term view:
Overview
Asia
China
- Steel production in China to stay rangebound in 2022 and contract in long term
- EAF penetration to slow down led by delay in carbon peak deadline
- Path to carbon neutral to weigh on iron ore demand
- Iron ore imports to decline slower than consumption
India
- Indian steel production to rise 8% in 2022
- Indian steelmakers to add 90Mt in the next decade
- India iron ore consumption to rise 3.3% through 2050
Japan
South Korea
- Impact of decarbonisation in Japan and South Korea
Taiwan
South East Asia
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 changes to the seaborne supply forecast this quarter:
- Key trends by product type
- Sinter fines
- Pellet feed
- Lump
- Pellet
Regional analysis: key changes to the forecast
- Brazil
- Chile
- Peru
- Canada
- United States
- Liberia
- Mauritania
- Sierra Leone
- Guinea
- South Africa
- Europe
- Russia
- Ukraine
- Kazakhstan
- China
- India
- Asia (excluding China and India)
- Iran
- Iron Ore Definitions and Value Chain
- Characteristics of Saleable Iron Ore Products
- Iron Ore Value Chain
- Australia
- Brazil
- China
- India
- Indian reserves and production
- Key Indian producers
- Indian policy framework
- Africa
- Canada
- Russian Federation/Ukraine/Kazakhstan
- Sweden
- Chile
- Peru
- Introduction:
- Methodology:

Tables and charts

This report includes 57 images and tables including:

Tier 3 and Chinese domestic supply requirement
Implied iron ore price 2022 and 2023
Price and cash cost, by percentile contestable market, CFR China)

Premium and discount for high/low grade iron ore (US$/t and %)
Iron ore lump premium
Blast furnace pellet premium
Overview of global steel and iron ore market
China key demand data
JKT demand dynamics
Korean iron ore demand to overtake Japans'
S.E.Asia Iron ore consumption
Indonesia to gain share in S.E.Asia
Europe: key demand forecast data
EU + UK share of iron ore consumption mix
EU + UK share of global iron ore trade
Turkey blast furnace consumption mix
Turkey Iron ore demand-supply dynamics
Key demand forecast data
North America: key demand forecast data
Canada iron ore consumption mix
Canada iron ore supply dynamics
South America steel and iron ore market forecasts
South america iron ore consumption mix by countries
Venezuela iron ore consumption
Middle East and North Africa: key demand forecast data
Iran DRI and HM production
Iran Iron ore product mix
Egypt & Algeria Iron ore consumption
Egypt & Algeria DRI production
Iron ore price forecast
Price forecast revision: the five-year view
Iron ore price forecast (a long-term perspective)
Incentive price analysis: selected projects
Project incentive prices (basis 62% Fe equivalent, CFR China)
China hot metal and iron ore dynamics
China BOF and EAF production
China long term iron ore supply dynamics
Asia (ex-China): key demand forecast data
India crude steel production
India monthly steel production
India capacity additions
India iron production
India iron ore consumption mix
Iron ore production and exports by major country
Iron ore exports by key company
China: domestic iron ore supply forecast revisions
Contestable Private Production at different price levels (Wet tonnes)
Indian iron ore production
Indian iron ore consumption
Iron ore grade comparison
Figure 1 Iron ore size depictions depicts lump ore, sinter feed, and pellet feed for visual reference.
Figure 2. The Iron Ore Value Chain
Figure 3. Agglomerated products
Figure 4. The blast furnace / basic oxygen furnace method (BF-BOF)
Figure 5. Direct-reduced iron / electric arc furnace method (DRI/EAF)
Simplified iron ore global balance
Iron ore Market Balance and Prices