{"id":1160883,"date":"2020-01-20T18:01:45","date_gmt":"2020-01-21T00:01:45","guid":{"rendered":"https:\/\/www.mining.com\/?p=1011789"},"modified":"2020-01-20T18:01:45","modified_gmt":"2020-01-21T00:01:45","slug":"five-iron-ore-trends-to-watch-in-2020-report","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1160883","title":{"rendered":"Five iron ore trends to watch in 2020 \u2013 report"},"content":{"rendered":"<p>Metals and mining\u00a0research\u00a0and consultancy group Wood Mackenzie has identified five trends that will impact the iron ore industry.<\/p>\n<div class='d-flex justify-content-center d-xs-block d-sm-block d-md-none'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>Slower demand growth, especially in China, and a<br \/>\ndecent recovery in seaborne supply will continue to feature prominently in the<br \/>\niron ore industry in 2020, Wood Mac said in a research note. Prices are<br \/>\npredicted to fall, with annual average price forecast for 2020 at $80\/ tonne.<\/p>\n<h2><strong>Vale \u2013 starting to give back some of what it took<br \/>\naway in 2019<\/strong><\/h2>\n<p>In 2020, Vale could once again be the biggest<br \/>\nswing factor for iron ore, but this time in the opposite direction.<\/p>\n<p>&nbsp;\u201cWood Mackenzie forecasts an accelerated recovery in<br \/>\nshipments from Q1-20, resulting in a 30 million tonnes (Mt) rise in seaborne exports<br \/>\nfrom Vale in CY 2020. In other words, half of last year\u2019s losses will be<br \/>\nrecovered in just one year,\u201d Research director Paul Gray said in a media<br \/>\nrelease.<\/p>\n<p>Looking further ahead, Vale\u2019s previous peak production (385 Mt in 2018) could be achieved as soon as 2021, pending extreme weather conditions and consequential supply chain disruptions. This is to the credit of the rapid repair and recovery program underway at the company\u2019s key hubs in Minas Gerais.<\/p>\n<p><strong>Chinese iron ore production &#8211; how sustainable as<br \/>\nprices fall?<\/strong><\/p>\n<p>Chinese iron ore production increased by<br \/>\napproximately 30 Mt in 2019 in response to strong domestic demand and tight<br \/>\nseaborne supply. In 2020, Wood Mackenzie forecasts a decent recovery in<br \/>\nseaborne supply.<\/p>\n<p>Chinese concentrate production will remain<br \/>\nbroadly stable in 2020 with no significant displacement occurring until 2021,<br \/>\nWood Mackenzie predicts. &nbsp;<\/p>\n<p>\u201cThere is more upside than downside risk to our<br \/>\nChinese iron ore production forecast for 2020. In H2-19 we saw how resilient<br \/>\nChinese domestic production (and price) has become due to falling seaborne<br \/>\nprices. This trend will likely persist through 2020 as further productivity and<br \/>\nefficiency gains are realized,\u201d Senior manager Ming He said. <\/p>\n<p>\u201cThe trend towards higher pellet rates in the<br \/>\nblast furnace burden and installation of more efficient pelletising capacity<br \/>\nwithin China should also support demand for domestic concentrate used as pellet<br \/>\nfeed,\u201d He added. <\/p>\n<p>The downside risk to production from increasingly<br \/>\nstringent safety and environmental protection policies has also diminished now<br \/>\nthat mine operators have upgraded equipment and improved the technical<br \/>\nefficiency of beneficiation.<\/p>\n<h2><strong>An Indian supply-side surprise?<\/strong><\/h2>\n<p>Indian imports could rise to 12 Mt in 2020. To<br \/>\nreduce reliance on expensive imports, either exports need to fall by a further<br \/>\n10 Mt or domestic production needs to rise by the equivalent tonnage.<\/p>\n<p>&nbsp;\u201cA<br \/>\nkey point to watch in 2020 is India\u2019s ability and willingness to boost domestic<br \/>\nproduction in response to stronger demand and wide spreads between domestic and<br \/>\nseaborne pricing. Look out for higher supply from NMDC (additional 3 Mt<br \/>\ncapacity at Kumaraswamy mines), an additional 3-4 Mt from JSW, plus SAIL\u2019s<br \/>\nenhanced ability to fill any shortages now that the government-owned producer<br \/>\nis permitted to sell 25% of production in the open market,\u201d Principal analyst<br \/>\nSandeep Kalia said.<\/p>\n<p>The mine lease auction process for 18 working<br \/>\nmines (with capacity to produce approximately 80 million tonnes per year<br \/>\n(Mtpy)) is scheduled for completion by end-February. The results of which will<br \/>\nprovide a good indication of potential production shortfalls.&nbsp;<\/p>\n<h2><strong>Premiums and penalties \u2013 where next?<\/strong><\/h2>\n<p>The past two years have been a roller-coaster<br \/>\nride for iron ore grade price spreads and impurity penalties \u2013 notably silica<br \/>\nand alumina differentials.&nbsp;<\/p>\n<p>&nbsp;\u201cIn<br \/>\n2020 we forecast a modest recovery in the 65\/62 spread&nbsp;(spread between the 65% Fe index and the 62% Fe index),<br \/>\nfrom an annual average of 12% in 2019 to 14% in 2020. However, with steel<br \/>\nprices likely to remain under pressure and iron ore prices currently trading<br \/>\nabove our forecast, there is risk of further steel margin compression, limiting<br \/>\nthe scope for higher premiums for high grade ore,\u201d Gray said. <\/p>\n<p>\u201cWe are also firm believers in the long run trend<br \/>\ntowards steel mills consuming more high-grade ore at the expense of low-grade<br \/>\nore, but this can come at a cost of rising alumina in blast furnace slag \u2013 too<br \/>\nmuch alumina increases slag viscosity, significantly reducing blast furnace<br \/>\npermeability which negatively impacts fuel rate and overall<br \/>\nproductivity.&nbsp;Watch out for rising alumina penalties and falling silica<br \/>\npenalties,\u201d Gray added. <\/p>\n<h2><strong>Will Simandou take off?<\/strong><\/h2>\n<p>Simandou\u2019s new owners, the Chinese-backed<br \/>\nconsortium SMB-Winning, announced last year that the mine has&nbsp;capacity to<br \/>\nproduce over 100 Mtpy of high-grade iron ore, and is expected to commence<br \/>\nproduction in 2025.<\/p>\n<p>&nbsp;\u201cA<br \/>\nproject of this scale in this location (Guinea) will almost certainly take more<br \/>\nthan five years to reach fruition.&nbsp;&nbsp;But more importantly, we think<br \/>\nthe market will struggle to absorb the additional supply, and it will be a<br \/>\nchallenge to earn sufficient return on investment,\u201d Gray said. <\/p>\n<p>\u201cHowever, key consortium partner China Hongqiao (Weiqiao) Group has significant influence and investments in Guinea. Ultimately, this could come down to a strategic desire for China to reduce reliance on imported iron ore from Australia and Brazil while increasing captive ownership of iron ore resources in a country where China already has considerable influence,\u201d Gray added.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In 2020, Vale could once again be the biggest swing factor for iron ore, but this time in the opposite direction.<\/p>\n","protected":false},"author":47,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[2849,949,369],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1160883"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1160883"}],"version-history":[{"count":5,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1160883\/revisions"}],"predecessor-version":[{"id":1161062,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1160883\/revisions\/1161062"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1160883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1160883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1160883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}