Iron ore trade to grow 35% over five years
After attempting a comeback of sorts last week iron ore prices have come under pressure again this week.
Benchmark Northern China 62% Fe imports tracked by The SteelIndex on Tuesday exchanged hands for $79.40 a tonne on Wednesday, the lowest price for the steelmaking raw material since September 7, 2009.
The price of seaborne iron ore has declined more than 40% this year as continuing worries about the Chinese economy and the flood of new supply dampen enthusiasm for the commodity.
However, estimates released Wednesday by the Australian government suggest growth in iron ore trading remains robust.
The country’s commodity forecaster, the Bureau of Resource and Energy Economics, says the global iron ore trade will expand to 1.33 billion tonnes this year, an 8.4% jump.
The pace will moderate somewhat next year to 4.2% growth to 1.38 billion tonnes. Over the next five years world trade in the steelmaking raw materials is projected to increase at an average annual rate of 2.9% to reach a total of 1.6 billion tonnes in 2019.
China will keep its dominance as top importer. This year the country's imports will reach a a record 875 million tonnes, up 7% on 2013 (stockpiles have also grown rapidly however, hitting a record 106 million tonnes in June).
In 2015 China’s iron ore imports are forecast to increase a further 6.6% to total 933 million tonnes and continue growing at 4.7% annual pace to reach 1.12 billion tonnes in 2019.
Top exporting countries Brazil and Australia are expected to increase their share of the global trade at the expense of Ukraine, South Africa and Iran, while India is likely staying on the sidelines with just 21 million tonnes of net exports by 2019.
Over the next five years Australia’s iron ore exports are projected to increase at an average annual rate of 5% and total 900 million tonnes in 2019.
After lagging in recent years, growth in exports from Brazil will outpace that of Australia. Number one iron ore miner Vale's home base will expand exports at an annual rate of 6% reaching 489 million tonnes in 2019.
Export growth is expected to come from expansions to existing mines and the completion of Vale’s 90 million tonne capacity Serra Sul mine in the Carajas region. Vale expects the development of its Serra Sul mine along with increased use of the Valemax bulk freighter to double its shipments to China in the next five years.