Iron Ore: An Expanding Glut Fuels 50% Price Decline

January 12, 2015

The price of iron ore has fallen some 50 percent this year, threatening high-cost producers.

 

Back in mid-December, a Reuters piece announced ominously, "Oil, coal and iron ore are at financial crisis levels." And as the year drew to a close, the results seem to be pretty much in, with Australia's Business Insider announcing on Dec. 23, "Iron Ore Got Smoked In 2014."

On Dec. 28, it was reported that, in its latest quarterly update, the Australian federal government's Bureau of Resources and Energy Economics had slashed its iron ore price forecast to an average of $63 per ton in 2015. This contrasts with a forecast of $94 per ton back in September.

 

Global Iron Ore Mine Production

China is, in terms of run-of-mine iron ore output, the world's largest iron ore producer. It is, also, both the world's largest consumer and its largest importer. However, its ore is of low quality, containing around 22 percent iron.

When comparing figures, other countries report mine production based on usable, as opposed to crude, ore.

 

2013 Estimated World Mine Production (Million Metric Tonnes)

China 1,320
Australia 530
Brazil 398
India 150
Russia 102
Others 169
Ukraine 80
South Africa 67
United States 52
Canada 40
Iran 37

Source: U.S. Geological Survey (USGS)

 

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