Iron ore: what to look for in 2016

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18 January 2016

Iron ore: what to look for in 2016

Report summary

Weak demand and persistent deflationary pressure pose downside risk to iron ore in 2016. The latest fall in crude oil and ongoing weakness in producer currencies could erode cost support below our base case and prevent any meaningful price recovery in a market characterised by excess supply capability and stagnant demand. In this Insight we highlight some key themes and risks for iron ore in 2016.

Table of contents

  • Executive summary
  • Theme 1: Chinese demand could be worse than forecast.
  • Theme 2: supply side shake-out will accelerate industry consolidation
  • Theme 3: cost deflation could have further to run.
  • Theme 4: will China continue to support loss making mines?
    • Minas Rio (Anglo American)
    • Serra Sul (S11D) (Vale)
    • Roy Hill (Hancock Prospecting)
  • Theme 6: upside risk for DR-grade pellet premia
  • Theme 7: value in use no longer holds; low grade fines preferred.
  • Theme 8: paper trading is taking off.

Tables and charts

This report includes 4 images and tables including:

  • Chart 1: Rising share of the majors
  • Chart 2: Price related closures
  • Chart 3: Iron ore prices: 62% Fe vs. 58% Fe
  • Chart 4: FMG realised price

What's included

This report contains:

  • Document

    Iron ore: what to look for in 2016

    PDF 332.25 KB

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