Iron Ore
Mixed Messages
January 2020
For the first eleven months of 2019, global steel production increased 2.7%; however, this has not been spread evenly. EU production declined 4.2%, and the driver of greater European growth, Turkey, has fallen 10.4%.

In Russia, production fell 0.6% and in South America, production was down 8.3%. Growth has been driven by Chinese production which rose by 7%, with strong growth also seen in Vietnam, Iran and the US, up 46.3%, 5.3% and 1.8% respectively.

US raw steel production in 2019 totaled 94.45 million tons at a capacity utilization rate of 80.1%, which was up 1.8% from the 92.78 million tons produced  in 2018 at a capacity utilization rate hit 78.2%—according to data from the American Iron and Steel Institute (AISI).

China's iron ore imports fell for a second consecutive month in November. Australia and Brazil exported less iron ore due to the overshadowing steel demands. Iron Ore reached 970.7Mt from January until November last year, decreasing by 0.7% annually. Sales were down 15% due to a deadly dam collapses at various mines from Vale in Brazil. Port Headland in Australia shipped less iron ore to China and was down 0.7% from the previous month. Imported Iron Ore at Chinese ports fell to 129.4Mt. Despite these losses, the profit for the mills is currently at 600 - 700 yuan (US$85 – US$99) per tonne and could lift Iron ore prices and demand.

India's imports of iron ore in January to October 2019 were 1.97Mt, down by 85% compared to the previous year. This caused a chain on effect, production volumes for pig iron and crude steel fell for October and caused steel exports to increase. India's iron ore exports experienced 66.5% increase due to the rise in steel. For pig iron a 2.5% increase year to year and a 2.8% increase for crude steel year to year. India's largest import was from South Africa with 766kt from January till October 2019. The second largest import was from Australia with 641kt.

Steel producers in India are expecting to be able to rely on large stockpiles of unsold iron ore to be able to bridge any supply gaps hat may occur as a result of the expiring of mining leases in Odisha and Karnataka. This would be preferable for local steel producers as a weakening domestic economy and slowing growth in steel demand would make it difficult for many to switch to large volumes of imported ore, which is more expensive than domestically sourced material. Any domestic shortage may see exports of pellets drop as Indian producers seek all available sources of domestic supply.