Wednesday May 20, 2015, 9:39am PDT
Mining.com reported that iron ore price is driven by fines and are what makes up the bulk of supply, however a new report from Minerals Value Service points out that concentrate, pellets and lump output have remained fairly consistent since 2010, meaning there may not be as much oversupply in the market as previously suggested.
As quoted in the market news:
"A trenchant new report by Minerals Value Service, a London-based research firm, urges a more nuanced reading of the iron ore supply picture. Fines drive the iron ore price and it makes up the bulk of supply, but MVS points out that concentrate, pellets and lump output has remained fairly consistent since 2010.
Blame for the current price slump should therefore be laid squarely on fines producers which are on course to almost double output from 2009 to just shy of 800 million per annum by the end of this year. Pellet production has hovered around 200 million tonnes per year since 2010
That compares to lump output of around 280 million tonnes last year, up by only some 20 million tonnes from 2009. Similarly pellet production has hovered around 200 million tonnes per year since 2010, while annual concentrate has only increased by around 10% over the same period according to MVS data.
In contrast to fines, demand for lump and particularly pellets are expected to rise as steel mills, particularly in China, battle to reduce pollution and increase plant efficiency, the authors note. Significantly, according to the report, the abundance of cheap fines – particularly grades between 56%–62% – won’t displace other classes at mills.