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Iron-Ore bear market deepens

The world is mining more iron ore than steelmakers need.

Australia, the largest supplier, sent 504 ships from Port Hedland during the first quarter carrying enough iron-ore exports to build more than 700 Golden Gate Bridges. Shipments jumped 35 percent to the biggest buyer, China, where inventories have ballooned to the highest ever.

After companies including BHP Billiton Ltd. and Rio Tinto Group expanded capacity to meet surging steel demand, output is climbing just as China’s economy slows to the weakest since 1990. Prices that already are down 15 percent in the past year will slump at least 16 percent further in the second half to less than $100 a metric ton, the lowest level since 2012, according to Credit Suisse Group AG and Standard Chartered Plc.

“Supply growth will overtake demand growth this year for the first time in a long time,” said Christian Lelong, a Sydney-based commodity analyst with Goldman Sachs Group Inc., which predicts prices to average $108 this year and slide to $80 in 2015. “You will start to see some signs of surplus probably during the course of the second quarter.”

Shipments from Port Hedland, about 1,300 kilometers (808 miles) north of Perth, surged 35 percent to a record 90.4 million tons in the first three months, the port authority says. Exports to China accounted for 79 percent of the total, including 27 million tons in March, the most ever.

Source Mine Web

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