SMM7, March 3: iron ore prices have risen 73% so far this year and are now at their highest level since January 2014.
This is mainly driven by a shortage of supply.
Vale suspended production of 93 million tons after a deadly dam collapse in Brazil in January, while production in Western Australia was affected by the storm, when iron ore giants such as Rio Tinto and BHP Billiton cut their production targets for this year.
However, the current tight supply situation has begun to ease.
On June 22, Vale (Vale) resumed production of Brucutu iron ore, which has an annual production capacity of 30 million tons, and the company's 1/3 production capacity, which was suspended in January, has been resumed.
In terms of iron ore exports, Brazil's iron ore exports in June also increased by about 500000 tons compared with January this year.
At the same time, Australia's iron ore exports also hit a record high, with shipments of (Port Hedland) in Port Hedland, Western Australia, the world's largest iron ore export port, up more than 20 per cent year-on-year at the end of June.
On the demand side, (Department of Industry), Australia's industry ministry, says Chinese steel production, which now accounts for half of global production, has reached a high point, with Chinese steel production up more than 10 per cent so far this year.
Falling demand superimposed supply has returned to normal, and (office of The Chief Economist), the Australian government's chief economist, estimates that iron ore prices will reach an average of $80 a tonne this year, but will fall to an average of $57 a tonne by 2021.
SMM believes that although the annual production capacity of Vale is 30 million tons, it is difficult to significantly improve the decline in the global iron ore supply. Superimposed Rio Tinto twice cut its 2019 iron ore shipment target to 3.2-330 million tons in June, and SMM expects the average iron ore price range to remain high at $85 to $95 a tonne in 2019. "related news-Vale has resumed 1/3 iron ore production, but the tone of global supply shortage remains unchanged.