The Iron Market
Australia, Brazil, India, South Africa and Canada are among the biggest exporters of iron ore in the world and it is expected that they maintain their level of exports as long as ۲۰۱۸. China, Japan, The EU, and South Korea also stand among the biggest importers of iron ore and their demand is unlikely to fall before ۲۰۱۸. The said countries are arguably the most decisive nations with respect to the future of the global market of iron ore.
Australia, Brazil, India, South Africa and Canada are among the biggest exporters of iron ore in the world and it is expected that they maintain their level of exports as long as 2018. China, Japan, The EU, and South Korea also stand among the biggest importers of iron ore and their demand is unlikely to fall before 2018. The said countries are arguably the most decisive nations with respect to the future of the global market of iron ore. It is predicted to see a downturn in iron ore prices in 2014 and 2015, since China -as the biggest importer of this sedimentary rock- seems to have come up with a surplus of iron ore and that this can leave a significant impact on the global iron ore market.
Iron ore Exports
Exports of hematite with a purity level of below 40 percent reached 23.5 million tons in 2013. Iran Customs Administration (IRICA) reported that the country's iron ore exports topped $1.5 billion in 2013. Iron ore comprised 29.44 percent of volume and 4.8 percent of the value of the country's non-oil exports respectively. The average price of iron ore for exports in 2013 was estimated at around $0.1. Moreover, iron ore topped the list of Iran's non-oil exports for the first time in 2013. According to IRICA's statistics, Iran's iron ore exports reached 2.6 million tons with an estimated worth of $199 million December last year. Iron ore made up 37.94 percent of the volume and 6.61 percent of the total value of the country's exports in April, 97 percent of which went to China. But it is important to first have a closer look at China's GDP, as the second biggest manufacturer and the number-one consumer of Iron ore in the world. China's GDP in 2007 was 14.2 percent, while the number decreased to 9.6 and 9.2 percent in 2008 and 2009 respectively as a result of global economic turmoil. International Monetary Fund's predictions on China's GDP came true and it is anticipated to see the decreasing fashion for several more years. It's no good news for the iron ore industry, as price drops would be the least of consequences. Japan, Germany and the United States are highly developed in terms of roads, railways and airports construction, while China is still lagging behind. Analysts are positive that China's dependence on steel for construction will lead to demands for more steel and consequently, more iron ore.
Iron ore Imports
China and Japan along with the European Union are the three biggest consumers of iron ore in the world. China's imports of iron ore have seen steady increase from 2000 to 2013. It is anticipated that the China's iron ore imports will continue the upward trend until 2010, although at a slower pace. China's iron ore imports will most certainly maintain a fixed rate from 2020 onwards. Thus, the future is promising for iron ore prices. More interestingly, China set yet another record last April and March with 83.39 million tons of iron exports, the second most valuable import of China in the iron ore industry.
Iron ore; the Future
Global estimates suggest that iron ore prices will fall in the long run through 2014 and 2015. The predictions are made by prominent international credit institutions and investment groups and by relating to grand projects for the development of mines in Australia, Brazil and China.
Analysts have different opinions on the future of iron ore industry. Some believe that China needs to boost its road construction industry should they want to compete with Japan, Germany and the US. As a consequence, China's demand for iron ore may increase through the next six years. Imports will enable China to make up for the shortage of iron ore in the country.
Other experts criticize the upward trend of iron prices and relate to China's GDP predictions and Chinese manufacturers' production index in their defense. The opponents argue that China's GDP will swing around 7.5 percent through 2014, but the number will decrease to 6.5 percent until 2019. In this scenario, construction in China will slow down and iron ore prices will ultimately fall. These experts believe that the declining rate of production in Chinese factories is a clear indication of their prediction and that the situation will remain the same through 2014 and global iron ore prices will possibly fall.
Another strong proof that critics adhere to is International Monetary Fund's prediction on global iron ore prices. IMF has predicted that iron ore's value will fall as low as $104 by the end of 2015. Furthermore, the effects of global steel market cannot be underestimated. Chinese media have reported that the country is faced with a surplus of 300 billion tons of steel, almost double the EU's steel reserves in the past year. China's steel and metal association has predicted the annual production of steel to reach 810 million tons after bearing a negative 3-percent blow. It seems that predictions on iron ore price-drops are closer to reality in near future and that China's construction and GDP are the only means of preventing global prices from decline.