Engineering & Mining Journal

OCT 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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IRON ORE OUTLOOK 48 E&MJ • OCTOBER 2018 www.e-mj.com While steel market conditions have con- tinued to improve in most regions, strong headwinds remain. According to the Or- ganisation for Economic Cooperation and Development (OECD) in its Steel Market Developments Q2 2018, it is uncertain whether the momentum will continue. The financial vulnerability of steel firms and the presence of distortive governmental sup- port and subsidies are still of great concern. World crude steel production grew to 1.689 billion metric tons (mt) in 2017, a new global all-time high. This is an in- crease of 3.8% over 2016, and the sec- ond consecutive year of growth. Chinese crude steel production in- creased by 24 million mt in 2017, an in- crease of 3%, compared to an increase by 0.6% in 2016. At 832 million mt, China continues to be, by far, the largest steel producer. Output by the second largest producer, Japan, was 105 million mt of crude steel in 2017. In 2017, nearly half (49.2%) of total world crude steel was produced in China more or less the same level as in the year before. According to the OECD, global steel- making capacity declined by 29.5 million mt in 2017 and reached (in nominal crude terms) 2.251 billion mt. The modest re- duction, -1.3%, however, falls short of alle- viating the global excess-capacity problem. Global steelmaking capacity increased from 1.056 billion mt, to 2.251 billion mt between 2000 and 2017. Meanwhile, steel production over the same period rose from 848 million mt to 1.689 billion mt. This suggests that the overcapacity has increased from 208 million mt in 2000 to 562 million mt in 2017. This equals a lower utilization rate of 75% in 2017 compared to 80% in 2000. During 2018, world steel capacity utilization ratio has in- creased and reached 78% in July with an average of 76% over 2018 up till and in- cluding July. In 2015, the utilization ratio was at its lowest during recent years and fell to 70%. Also, 2015 is the year with the highest recorded capacity of 2.334 billion mt. Since then, more steel capacity has been shut down than what has been in- stalled, while at the same time production of crude steel has increased. However, at present, there are new projects adding 52 million mt of gross capacity scheduled to come on stream during the period 2018- 2020. Additional capacity increases of 39 million mt are in early planning stages for possible startup during the same period. Global exports of finished and semi-fin- ished steel products reached 463 million mt in 2017, down 2.2% from 474 million mt in 2016. China is the main exporter with 75 million mt or 16.2% of total ex- ports down 30.8% from 108 million mt in 2016. The European Union (EU) exported a total of 148 million mt of which 117 Iron Ore Markets Improve in Most Regions Taking sharp cuts in steel production during the first half of 2018, future developments in China will be crucial to the iron ore market By Anton Löf, Magnus Ericsson & Olof Löf A stacker-reclaimer manages stockpiles of iron ore for the Roy Hill mine in Australia, which is ramping up to 55 million mt/y. In 2017, iron ore production from India grew to 202 million mt, a 9.4% increase.

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