Global Iron Market
Although the major iron producers are investing to maintain their market share, there are opportunities for new producers to share in the market growth, thus helping end-users diversify their supply.
Prices for iron ore are expected to resume their upward trend after the dip experienced in late 2008. China, the world’s largest buyer of iron ore continues to boost imports of the mineral. In total, China’s steel use will be 35% of the world total.
Prices forecast by Canaccord|Adams for iron indicates a settling back to sustainable prices that are a little more than double the prices seen in the 1990s.
Based on an average market price of pig iron at $350 per ton, the value of world crude steel production is approximately US$460 billion per annum, almost 4 times the value of crude steel produced at the end of the 1990s.
Niche offerings are attractive to end-users seeking to diversify their supply, especially those companies focusing on the pellet market for direct reduction or blast furnace steel makers. Even more attractive for new producers, is the supply iron units in the form as pig iron (direct reduced iron).
Canaccord|Adams suggests a likelihood that niche offerings will always find a market to help end-users diversify supply by focusing on the pellet market, or even better, if new producers set out to supply iron units in the form of pig iron or direct smelting iron.
The foregoing was adapted from Canaccord|Adams“Iron Ore Market Review & Project Developers”, October 16, 2007
