As we already know about the ‘Global Iron Ore Glut’. We had earlier reported how the major iron ore producers namely Vale, RioTinto and BHP Billiton are planning to ramp up their production. Furthermore, the new upcoming projects by these major miners have been harming the global iron ore prices.
Global iron ore prices are declining day-by-day. On 26 Nov’15, spot iron ore fines prices (Fe 62%) were recorded at USD 43.6/MT, CFR China. Prices are below the level of new 10-year low (at USD 44.1/MT CFR China), which occurred in the month of Jul’15 and a way long to decline further.
Reasons behind decline in global iron ore prices are oversupply of iron ore in the market coupled with almost negligible steel demand and slow economic growth in China.
When the Australian Roy Hill project will commence its operation potentially any day now, it will add extra 55 MnT iron ore to glut caused worldwide. This will definitely force iron ore prices to decline down further.
But, Roy Hill mine isn’t even the half bad news for iron ore market. There is also a new addition of iron ore mine by Vale. The upcoming Vale’s project named S11D, also known as Serra Sul, a part of Vale’s massive Carajas complex, will add another 90 MnT of iron ore to miner’s capacity in 2016. Almost 60% of the work had been completed. After its commencement, the annual production figure of the company would come out to be 440 MnT iron ore per year.
Last month, the company announced record high quarterly production i.e. 88 MnT of high grade ore. The company aims to continue its annual production guidance i.e. 350 MnT iron ore for this year.
Earlier this month, the miner had warned that the deadly collapse of a dam at Samarco, the iron ore company owns 50:50 with BHP Billiton, would impact production at two nearby mines. Vale’s Fabrica Nova and Timbopeba mines outputs, which would be reduced by 3 MnT in 2015 and by 9 MnT in 2016.
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