Rising global iron ore output & weakening steel demand in China is becoming a matter of concern for the country’s economy. Global iron ore prices have hit 3-month low and are heading towards a further decline. Australian (Fe 62%) fines prices yesterday closed at USD 50.9/MT, CFR China.
World’s major miners registered strong quarterly iron ore outputs
World’s major miners namely Vale, Rio Tinto & BHP Billiton in their recently announced quarterly results have posted strong iron ore outputs.
- Vale recorded its highest ever quarterly iron ore production in Q3 2015 with production of 88.2 MnT (up by 2.9% Y-o-Y). Aims to produce 340 MnT in this year
- Rio Tinto ramped up its quarterly iron ore production by 12% Y-o-Y to 86.1 MnT in Q3 2015 and maintains annual iron ore sales target of 340 MnT
- BHP Billiton produced 61.3 MnT iron ore in quarter ended Sept’15 (up by 7.5% Y-o-Y). Iron ore production guidance for 2016 financial year remains unchanged at 247 MnT
Chinese steel output continue to contract
China’s manufacturing sector has remained dull since the beginning of this fiscal year. According to government’s official manufacturing survey, China’s manufacturing PMI stood at 49.8 in Sept’15. Whereas, as per survey done by Caixin/Markit general manufacturing PMI for Sept’15 stood at 47 against 47.3 in Aug’15.
Steel mills in China who are adversely impacted by the weakening steel prices have reduced their iron ore purchases. This has resulted in rise in stock of iron ore at ports, which is 84.1 MnT (as on 19 Oct’15).
Since Apr’15, Chinese rebar export offers have declined by around 27%. China produced 66.1 MnT crude steel in Sept’15 (down by 3% Y-o-Y).
Falling steel prices in China has not only depressed domestic market in China but also the global sentiments world wide.
Leave a Reply