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 50 E&MJ • OCTOBER 2018 www.e-mj.com © 2018 Calumet Branded Products, LLC W W W . B E L R A Y . C O M M a i n t e n a n c e C o s t S a v i n g s D e c r e a s e D o w n t i m e E x t e n d C o m p o n e n t L i f e R e d u c e C o n s u m p t i o n O u t s t a n d i n g E x t r e m e P r e s s u r e , S h o c k L o a d a n d A n t i - W e a r P r o p e r t i e s 2.1%. The second largest exporter, Bra- zil, has a market share of 24%. Brazil- ian exports grew by 2.6% in 2017 and reached 384 million mt. South Africa exported 67 million mt of iron ore in 2017, which makes it the third largest exporter. Canada, No. 4, and the Ukraine, No. 5, exported 43 million mt and 37 million mt, respectively, in 2017. Sweden is the seventh largest ex- porter and shipped some 24 million mt in 2017. Together the five most important iron ore exporting countries accounted for 87% of total exports in 2017, down mar- ginally from 88% in 2016. India's exports continued to grow in 2017 reaching 22 million mt still far from the peak in 2009 at 117 million mt. The rebound came as the Indian government, in February 2016, cut the country's iron ore export tariffs and eased restrictions. China alone accounts for 69% of total imports. During 2017, the country's im- ports of iron ore increased 5% following a growth of 7.7% in 2016. With rising imports and falling domestic production, Chinese import dependency has reached even further heights and was 90% in 2017, up from 89% in 2016. In 2017, the seaborne iron ore trade in- creased by 2.9% to 1.504 billion mt. As in earlier years, the increase was entirely due to higher Chinese imports. Brazilian ex- ports for the period January-August 2018 increased with a modest 0.5% compared to the same period in 2017. Chinese im- ports declined by 0.7% during the period January to July 2018 compared to previ- ous period. Chinese imports thus totaled 621 million mt for the first seven months, or 1.065 billion mt on an annualized rate. Iron Ore Pellets Global production of pellets in 2017 in- creased to 420 million mt, up 5.4% com- pared to 2016. Exports of pellets also grew with 7.9% to 133 million mt. Pellet exports grew mainly from Brazil, Russia and India. The share of pellets in total iron ore pro- duction has declined since the late 1990s when it ranged between 26%-27%. Devel- opments in recent years have underlined the sensitivity of pellet demand to world market conditions and prices. The closure of Samarco capacities caused the pellet share of total production to shrink even lower. In 2017, it was as low as 19%, the same proportion as 2016. Iron Ore Prices Iron ore prices, 62% Fe CFR China, in 2017 remained at relatively high levels, but volatility increased. In 2017, it start- ed just shy of $80/mt and reached its highest peak 2017, just above $95/mt, in mid-February. This peak was, however, followed by a decline to $54/mt in mid- June, the lowest price recorded for 2017. The year ended just above $74/mt. The average price in 2017 was $71/mt, up 22% compared to $58/mt in 2016. So far in 2018, iron ore price, 62% Fe CFR China, has been rather stable. During the first three months, this quality traded between $70/mt and 80/mt. In April, the price fell and reached a low of $63/mt in the early days of the month. Between April and September, the price, has moved be- tween $60/mt and $70/mt. The average iron ore price, 62% Fe CFR China, for January-September 2018 is $69/mt, a decrease from last year of 3.4%. The price of iron ore held up well during 2017 on the back of robust demand from China. However, the iron ore pricing sys- tem is going through a period of change. When the benchmark pricing model fell apart in 2009-2010, the dominating 62%

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