Engineering & Mining Journal

NOV 2017

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IRON ORE REPORT 34 E&MJ • NOVEMBER 2017 www.e-mj.com 5.9%. The second largest exporter, Brazil has a market share of 25%. Brazil saw a slightly lower growth in exports, up 2.1% to 374 million mt compared to 2015. South Africa exported 65 million mt of iron ore in 2016, which makes it the third largest ex- porter. Canada, No. 4, and the Ukraine, No. 5, exported 41 million mt and 37 million mt, respectively, in 2016. Sweden is the sixth largest exporter and shipped some 23 million mt in 2016. Together the five most important iron ore exporting countries ac- counted for 88% of total exports in 2016, down marginally from 89% in 2015. India's exports have dwindled from the 2009 peak of 117 million mt, to a little more than 4 million mt in 2015, however, in 2016, exports increased by more than 400% and reached 22 million mt. The fall was the result of government policies, which have included export taxes on iron ore lumps and fines, including railway tar- iffs that punishes producers of iron ore for export, bans or caps on production in the states of Karnataka, Goa and Orissa, and actions against illegal mining. In Febru- ary 2016, the Indian government cut the country's iron ore export tariffs and eased restrictions, which has led to a surge in mining and more notably exports. China alone accounts for 69% of total imports. During 2016, the country's im- ports of iron ore increased 7.7% following a lower growth of 2% in 2015. With rising imports and falling domestic production, Chinese import dependency has reached even further heights and was 90% in 2016 up from 89% in 2015. In 2016, the seaborne iron ore trade increased 5.8% to 1.461 billion mt. As in earlier years, the increase was entirely due to higher Chinese imports. For 2017, iron ore shipments for the first nine months of the year from the Pilba- ra ports in Western Australia have increased by 4.6% compared to the same period last year. Brazilian exports for the period Janu- ary-August 2017 increased with 5% com- pared to the same period in 2016. Chinese imports follow this pattern and increased by 4.8% during the period January to Sep- tember 2017. Chinese imports thus totaled 800 million mt for the first 9 months, or 1.070 billion mt on an annualized rate. Iron Ore Pellets Global production of pellets in 2016 fell sharply to 398 million mt, a decrease of 10% compared to 2015. Exports of pel- lets also experienced a decrease and fell as much as 18%. The reason is related to the tragic dam failure in Brazil in Novem- ber 2015. During 2016, the effects of the capacity reduction in Brazil has taken its toll on the global pellet market with lower production, which has led to higher prices of pellets. The share of pellets in total iron ore production has decreased since the late 1990s, when it ranged between 26%- 27%. Over the past several years, how- ever, it has remained roughly stable, at 22%-23% (22% in 2015). Developments in recent years have underlined the sen- sitivity of pellet demand to world market conditions and prices. During the financial crisis, pellet demand decreased more than the relatively cheaper feed materials iron ore fines and lump. The closure of Samar- co capacities caused the share of total pro- duction attributed to pellets to shrink even lower and in 2016 it was as low as 19%. Iron Ore Prices Last year (2016) started off with an iron ore price for the most common standard qualities (as measured by for example the Platts 62 IODEX index) around $40/mt, the lowest level since the benchmark pric- es were abandoned 2009/2010. During the early months of 2016, this price im- proved substantially, rising to almost $70/ mt in April and reached an annual high in December 2016, just below $84/mt. The average price in 2016 was $58/mt. In 2017, the iron ore price for 62% Fe CFR China grew at the beginning of the year and reached around $90/mt by mid-March. By the end of June, this price had fallen back toward $55/mt only to start growing again with prices up toward $75/mt in late August, early September. Currently, the price has stabilized around $60/mt. With an Top Iron Ore Miners in 2016 Prod. (Mt) % of Prod. (Mt) Rank Company Name Country 2016 World 2015 2015 0 1 Vale Brazil 348.8 16.6% 346.1 0 1 0 2 Rio Tinto U.K. 281.3 13.4% 263.3 0 3 0 3 BHP Billiton Australia 262.4 12.5% 273.8 0 2 0 4 Fortescue Metals Group Australia 171.1 0 8.2% 160.5 0 4 0 5 Anglo American U.K. 0 57.6 0 2.7% 0 44.9 0 6 0 6 ArcelorMittal U.K. 0 55.2 0 2.6% 0 61.0 0 5 0 7 Metalloinvest Russia 0 40.7 0 1.9% 0 39.5 0 7 0 8 NMDC India 0 32.4 0 1.5% 0 28.9 10 0 9 Metinvest Ukraine 0 29.6 0 1.4% 0 37.9 0 8 10 Cleveland Cliffs USA 0 27.8 0 1.3% 0 29.8 0 9 Iron ore prices have fluctuated substantially since the beginning of 2016.

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