Industry Trend Analysis - Iron Ore: Brazil And Australia To Drive Growth - DEC 2016
BMI View : Global iron ore production growth will stagnate due to contracting output by high-cost iron ore producers in China. Meanwhile, output growth in Australia, Brazil and India will remain positive thanks to a pipeline of expansion projects by major miners.
Global iron ore production will grow minimally from 3,133mn tonnes (mnt) in 2016 to 3,256mnt by 2020. This represents average annual growth of 0.1% during 2016-2020, significantly lower than average growth of 4.8% during 2011-2015. On the one hand, supply growth will be primarily driven by Australia and Brazil, on the back of expanding output by major miners, such as Rio Tinto, BHP Billiton, Vale and Fortescue Metals Group. On the other hand, miners in China, which operate at the higher end of the iron ore cost curve, will be forced to cut output due to continued iron ore price weakness.
|Output To Grind To A Halt|
|Global - Iron Ore Mine Production (mnt) & Growth y-o-y (%)|
|e/f = BMI estimate/forecast. Source: USGS, BMI|