CONF: Iron ore price to hover above $80/t for 2019
“We are still optimistic about China’s steel demand in 2019, expecting it to achieve 3% (year-on-year) growth mainly because of the infrastructure construction,” he said.
At the same time, India’s demand for finished steel is anticipated to grow at an annual 5% rate for the next 15 years, Gray said, adding that India is now in the “transitional period” from being a net iron ore exporter to neither seller or buyer, to eventually becoming a net importer of iron ore.
As for iron ore supply, Gray assessed the net loss in Vale’s supply because of its tailings dam collapse on January 25 and a series of developments afterwards at 30 million tonnes. He noted that Vale’s total iron ore exports account for about 30% of the global iron ore market, while the company enjoys the biggest share in the global pellet market, so the supply gap will be bigger in Europe and Middle East.
Besides, “there is not much excess capacity in the iron ore market, and the Vale crisis has led to an imbalance of demand and supply in the market,” he elaborated. Thus, the price expectation of “mid $80/dmt CFR looks achievable for calendar year 2019,” he told delegates.
Conference attendees quizzed by Mysteel Global held varying views on the affect of Vale’s accident on the global iron ore market, especially in Asia, though they hesitated to offer any specific projection for iron ore prices.
“No one knows how long the production halts will last at Vale’s mines – it could be long or short,” an Indian iron ore trader commented to Mysteel on the conference sidelines. “But I think the market has paid too much attention to the Vale issue. China, as the largest iron ore importer, has all kinds of iron ore inventories at port, at the steel plants, and even at Vale’s distribution centres in China.”
An Indian iron ore pellet exporter suggested that if global iron ore prices persist at $80-90/dmt CFR, this would most probably trigger new supplies to emerge in the market from non-core miners to ease whatever supply tightness emerges for the commodity globally.
In 2018, China imported 1.06 billion tonnes of iron ore, while India imported 15.6 million tonnes of iron ore, according to SteelMint’s data, with the largest proportion being lumps from Australia.
Written by Hongmei Li, li.hongmei@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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