A new report from Roskill offers an insight into the dynamics driving the iron ore market, and a market outlook to 2020.
With the disruption of supplies from India, concerns over slowing economic growth in China, and the effects of large stockpiles forcing the price of iron ore through a series of supposed "price floors", the iron ore industry has faced a turbulent time during 2011 and 2012.
Downward revisions in the long-term outlook for iron ore demand and prices are likely to lead to the delay, suspension or cancellation of a large number of projects, the report suggests. Producers at the higher end of the cost curve—particularly those in China—will gradually find themselves unable to compete in the open market.
Uncertainty over the Eurozone affects the iron ore industry through its effect on demand, as well as on the reduced availability and higher cost of capital. Revisions of figures on Chinese growth targets and performance are likely to result in further short-term peaks and troughs.
Other risk factors include growing resource nationalism, particularly in Africa, highly unpredictable energy costs, rising labour costs, and the fate of the Indian mining industry following the mining bans in Goa and Karnataka states.
