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Commodity Market Report

Iron ore market service - Q3 2021 outlook to 2035

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30 September 2021

Iron ore market service - Q3 2021 outlook to 2035

Report summary

Iron ore is at a transition point. The same drivers of rising prices through 2019/20 went into reverse from mid-2021: supply constraints started to ease, but more significantly, the long awaited and much talked about cuts to Chinese steel production started to take effect, reinforcing our view that 2020/21 = peak hot metal production for China. Given China's dominance of global seaborne iron ore demand, the impact on pricing is pronounced. The big hit occurs in 2022: our price forecast has been cut to $90/t CFR. Smaller downward adjustments have been applied for subsequent years with 62% Fe fines forecast to average $72/t CFR (in real terms) between 2023-25. Under a weak demand scenario it is unlikely that prices will fall below $60/t CFR for a protracted period due to cost support around the 90th percentile of the cost curve for contestable supply. Our current assessment of iron ore market dynamics and price outlook to 2035 are presented in this report.

Table of contents

    • Demand revisions
    • Supply revisions
    • Price forecast revisions
    • Seaborne Trade
    • Price Forecast
  • Simplified market balance and implied clearing price:
  • Price versus costs
  • Premiums and discounts
  • Price outlook for lump
    • Past trends in pellet premia
    • Future tends in pellet premia
    • Forecasting rationale
    • No change to long term price forecast - but potential downside risk post-2035
    • Incentive price analysis
    • Key swing factors that could impact the long-term view:
  • Overview
  • Asia
    • Steel production up again in 2021 but hot metal production to slow down
    • Higher scrap usage to weigh on iron ore demand in the future
    • Iron ore imports to decline slower than consumption
    • Indian integrated steel players to go big on capacity expansions
    • Green steel to make inroads but BOF will remain dominant technology in the long term
  • Japan
    • 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
    • Key changes to the seaborne supply forecast this quarter:
    • Key trends by product type
    • Sinter fines
    • Pellet feed
    • Lump
    • Pellet
    • 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 59 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 (%)
  • Premium and discount for high/low grade iron ore (US$/t)
  • Iron ore lump premium
  • Key demand forecast data
  • China key demand data
  • Lower Japanese demand will drive lower consumption in JKT
  • Korean iron ore demand will overtake Japan by 2035
  • South East Asia iron ore consumption
  • Indonesia's and Vietnam's share of iron ore consumption to rise over time
  • Europe: key demand forecast data
  • EU+UK is responsible for 8% of 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 satisfies around one-third of domestic demand but as demand rises that share will fall to one-quarter
  • Key demand forecast data
  • North America: key demand forecast data
  • Blast furnace closures will hurt Canadian iron ore consumption
  • Canada produces pellets and is a major exporter of pellets and pellet feed.
  • South America: key demand forecast data
  • Brazil is the dominant consumer of iron ore in South America
  • Venezuelan iron ore consumption has been decimated by the economic collapse. We forecast a recovery but only in the long term
  • Middle East and North Africa: key demand forecast data
  • Iran DRI and hot metal production
  • Iran iron ore consumption by product
  • Egypt and Algeria iron ore consumption
  • Egypt and Algeria DRI production
  • Iron ore price forecast
  • Price forecast revision: the five-year view
  • Blast furnace pellet premium
  • Iron ore price forecast (a long-term perspective)
  • Incentive price analysis – selected projects
  • 'Project incentive prices (62% Fe fines equivalent CFR China) (Simandou @12% IRR)
  • 'Project incentive prices (62% Fe fines equivalent CFR China) (Simandou @20% IRR)
  • China hot metal production and iron ore imports
  • BOF and EAF production forecast
  • Long-term China iron ore forecast
  • Asia (ex-China): key demand forecast data
  • Capacity additions by large Indian steelmakers
  • India crude steel production
  • India iron ore market
  • India iron production
  • India iron ore consumption by product
  • 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)
  • India mine capacity additions
  • India iron ore and pellet production
  • 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
  • Tier 3 and Chinese domestic supply requirement and price forecast

What's included

This report contains:

  • Document

    Iron ore market service - Q3 2021 outlook to 2035

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