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Quotes of iron ore continue to decline

26 January 2015

Australia, the undisputed leader on export of iron ore raw materials, lowered forecast for the average cost of ore in 2015 at 33%. Earlier, analysts predicted the price of a ton at the level of 94 USD, now quotes will be 63 USD / ton. The average price of iron ore in 2014 amounted to about 88 USD / ton. Experts Bureau of Resources and Energy Economics believe that the oversupply will be present at the beginning of the new year, given the slowdown in China's housing sector. At the same time more and more Chinese manufacturers will leave the market, given the winter.

According to the new analytical data in the new year the volumes exported by Australia iron ore will increase to 766 million. Tons. Previously, experts called the performance at the level of 768 million. Tons. Last year the figure is expected to be 718 million. Tons. Assumptions about the physical volume of production in 2014−2015 gg. increased to the level of 774.2 million. tons, whereas before expectations were 764.8 million. tons. BREE Analysts believe that in 2015, Brazilian exports of iron ore will increase by 7%, to the level of 388 million. Tons. In 2014, exports grew by 9.7% — 362 million tons… China imported volumes in 2014 amounted to 938 mln. Tons. In 2015, they will increase to 973 million. Tons. Previously, experts called BREE figures at 875 million. Tonnes and 933 million. Tons respectively.

It is expected that in 2014 global iron ore trade increased by 10%, to the level of 1.35 billion. Tons. The main active factor was the increase in Australian and Brazilian supply — + 24% and + 10% respectively. In 2015, global trade will grow by 2.8% and amounted to 1.4 bln. Tons.

In 2015, analysts promise a lot of difficulties for the iron ore industry. However, according to Peter Popping, Vale's CEO, the raw material cost is unlikely to continue to decline. In his opinion established a relative balance between supply and demand in the next few years. Peter Popping in November 2014 and was replaced by José Carlos Martínez. The reason was the statement of a former top manager of the restoration of quotations to the level of 105 USD / ton. After that, the price of iron ore has dropped to the level of 68 USD / ton. In 2015 Valeplaniruet reduce capital investments by 26%, amounting to 10.2 billion. USD.

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