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Researched by Industrial Info Resources Australia (Perth, Australia)--The price of seaborne iron ore fell to less than US$80 per tonne this year, as the industry has been beset by worries concerning China's economy and a torrent of new supply. Prices have dropped more than 40% in the last five years.
Industrial Info is tracking 140 planned iron-ore projects, worth US$64.22 billion, in the Oceania region. The gradual downturn in prices during the past year has forced lengthy project delays in the Metals & Minerals Industry, and it is unlikely that these projects will see much change in the medium term.
Growth in China is slowing, which means less industrial output and a deceleration of the country's colossal infrastructure build-out. According to a recent statement by China Finance Minister Lou Jiwei, the country will not be making any major policy adjustments due to a change in one economic indicator: The industry is oversupplied, as the biggest producers increased output in response to falling prices during the last 10 years. As a result, it is doubtful that iron ore prices will make a spectacular recovery in the short term.
Developers most likely will wait for prices to rise before moving ahead with any capital projects. Lower prices pressure smaller mines to shut down. Larger mines can endure lower prices, because their cost of production is lower.
The AU$2.5 billion grassroot Mutooroo Magnetite joint-venture project is a clear example of the problems facing smaller industry. The project has been delayed for a number of years, with no sign of progress. Likewise, the AU$2.5 billion grassroot Balmoral South project in Karratha has been postponed until funding can be provided by an external investor.
Larger players also are affected by the iron ore price. Rio Tinto (NYSE:RIO) (London, England) recently shelved the grassroot Koodaideri project as a result of fluctuating iron prices.
View Project Report - 300027547 86000736 300093113
It has been suggested that China's government has slowed economic growth to crack down on less desirable aspects of the country's rapid development. Driving down the bubble on private housing and cleaning up corruption are now focus points in the country.
If production is cut back as a result of the price drop, the industry will eventually see an increase in prices. Reuters recently reported total capacity is expected to fall by 124 million tonnes.
Fortescue Metals Group Limited (ASX:FMG) (Perth, Australia) could perhaps be one of the companies positioned well enough to survive the downfall, after having almost completed its Iron Bridge Hematite project in Port Hedland, with active plans to expand the site into a much larger producer in the near-term.
Brownfield projects across the industry, particularly expansions that would allow companies to produce more iron for less cost, could be the major difference between those companies that survive the fallout, and those that do not.
View Project Report - 300132567 300168447
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking 140 planned iron-ore projects, worth US$64.22 billion, in the Oceania region. The gradual downturn in prices during the past year has forced lengthy project delays in the Metals & Minerals Industry, and it is unlikely that these projects will see much change in the medium term.
Growth in China is slowing, which means less industrial output and a deceleration of the country's colossal infrastructure build-out. According to a recent statement by China Finance Minister Lou Jiwei, the country will not be making any major policy adjustments due to a change in one economic indicator: The industry is oversupplied, as the biggest producers increased output in response to falling prices during the last 10 years. As a result, it is doubtful that iron ore prices will make a spectacular recovery in the short term.
Developers most likely will wait for prices to rise before moving ahead with any capital projects. Lower prices pressure smaller mines to shut down. Larger mines can endure lower prices, because their cost of production is lower.
The AU$2.5 billion grassroot Mutooroo Magnetite joint-venture project is a clear example of the problems facing smaller industry. The project has been delayed for a number of years, with no sign of progress. Likewise, the AU$2.5 billion grassroot Balmoral South project in Karratha has been postponed until funding can be provided by an external investor.
Larger players also are affected by the iron ore price. Rio Tinto (NYSE:RIO) (London, England) recently shelved the grassroot Koodaideri project as a result of fluctuating iron prices.
View Project Report - 300027547 86000736 300093113
It has been suggested that China's government has slowed economic growth to crack down on less desirable aspects of the country's rapid development. Driving down the bubble on private housing and cleaning up corruption are now focus points in the country.
If production is cut back as a result of the price drop, the industry will eventually see an increase in prices. Reuters recently reported total capacity is expected to fall by 124 million tonnes.
Fortescue Metals Group Limited (ASX:FMG) (Perth, Australia) could perhaps be one of the companies positioned well enough to survive the downfall, after having almost completed its Iron Bridge Hematite project in Port Hedland, with active plans to expand the site into a much larger producer in the near-term.
Brownfield projects across the industry, particularly expansions that would allow companies to produce more iron for less cost, could be the major difference between those companies that survive the fallout, and those that do not.
View Project Report - 300132567 300168447
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
