Commodity Market Report
Iron ore market service - Q3 2021 outlook to 2035
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
Iron ore is at a transition point. The same drivers of rising prices through 2019/20 went into reverse from mid-2021: supply constraints started to ease, but more significantly, the long awaited and much talked about cuts to Chinese steel production started to take effect, reinforcing our view that 2020/21 = peak hot metal production for China. Given China's dominance of global seaborne iron ore demand, the impact on pricing is pronounced. The big hit occurs in 2022: our price forecast has been cut to $90/t CFR. Smaller downward adjustments have been applied for subsequent years with 62% Fe fines forecast to average $72/t CFR (in real terms) between 2023-25. Under a weak demand scenario it is unlikely that prices will fall below $60/t CFR for a protracted period due to cost support around the 90th percentile of the cost curve for contestable supply. Our current assessment of iron ore market dynamics and price outlook to 2035 are presented in this report.
Table of contents
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What’s changed since Q2 2021?
- Demand revisions
- Supply revisions
- Price forecast revisions
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The five-year view - what’s changed?
- Seaborne Trade
- Price Forecast
- Simplified market balance and implied clearing price:
- Price versus costs
- Premiums and discounts
- Price outlook for lump
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Price outlook for pellets
- Past trends in pellet premia
- Future tends in pellet premia
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The Long-Term Outlook (post-2025)
- Forecasting rationale
- No change to long term price forecast - but potential downside risk post-2035
- Incentive price analysis
- Key swing factors that could impact the long-term view:
- Overview
- Asia
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China
- Steel production up again in 2021 but hot metal production to slow down
- Higher scrap usage to weigh on iron ore demand in the future
- Iron ore imports to decline slower than consumption
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India
- Indian integrated steel players to go big on capacity expansions
- Green steel to make inroads but BOF will remain dominant technology in the long term
- 27 more item(s)...
Tables and charts
This report includes the following images and tables:
- Tier 3 and Chinese domestic supply requirement
- Implied iron ore price 2022 and 2023
- Price and cash cost, by percentile contestable market, CFR China)
- Premium and discount for high/low grade iron ore (%)
- Premium and discount for high/low grade iron ore (US$/t)
- Iron ore lump premium
- Key demand forecast data
- China key demand data
- Lower Japanese demand will drive lower consumption in JKT
- Korean iron ore demand will overtake Japan by 2035
- South East Asia iron ore consumption
- Indonesia's and Vietnam's share of iron ore consumption to rise over time
- 47 more item(s)...
What's included
This report contains:
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