RALEIGH, N.C., Jan. 23, 2023 /PRNewswire/ -- Iron is one of the most extensively used metals in the world and plays a crucial role in many industries. Its strong and durable properties make it ideal for construction and other heavy industries. It's one of the most extensively traded metals around the globe.
The Iron ore market's supply chain has been severely affected by the lockdowns in China in H2 2022, the Russia-Ukraine war, and the related sanctions. In 2022, a 24-26% decrease is expected to be seen in the costs of iron ore.
The Russia-Ukraine war, COVID-19, uncertain trade, and the tariffs all have contributed to fluctuations in steel demand. On the other hand, China will now utilize scrap material/higher grade iron ore for steel manufacturing to control carbon footprints from the blast furnaces. As a result, the demand for low-grade iron ore will be affected.
The major global iron ore exporters are Canada (55 MMT) and South Africa (65 MMT),Brazil (359 MMT) and Australia (872 MMT). India has a 2% share. The major end-user industries of iron ore include Steel (95%), Magnets and Auto-parts (2%), and Cosmetics, Paints, and Printing (2%). In September 2022, a 2.2% increase was victimized in the Iron ore shipments from Port Hedland in Western Australia, summing up to 45.96 million tonnes.
Additionally, China is the world's largest iron ore consumer and importer, with about 822.54 million tons of iron ore as reported in January-September 2022. China's monthly import rate has also increased by 3.6% to 99.7 million tonnes. The world crude steel production has experienced an increase of 3.7%, contributing to 151.7 million tons (MT) in September 2022 from a year earlier. As predicted by CISA, the country's daily crude steel production has seen a spike of 1.2% reduction in mid-October from October 1-10 and is valued at 2.79 million t/d at the moment.
Distributors and service centers cannot sell off their existing stocks since the steel makers have enough iron ore. As a result, they are likely to go into destruction mode in the short term, which will add to the downward pressure on pricing. Due to China's cut-off on its iron ore demand, the prices of the input cost movement have fallen by 0.7% to 0.767 CNY/ kWh in September 2022. And they've planned to keep the demand for Iron lower than it was a year earlier. The primary factors affecting the cost of iron ore are labor and energy. Apart from these, materials, fuels, and other operational costs also contribute to the expenses. Labor costs are expected to experience a gradual increase yearly.
The Indian government has imposed a 50% export tax on all grades of iron ore, which is likely to stop exports of the country's key raw material for steel production and increase the already high supply-side volatility in international markets.
The Chinese government's restrictions on the production of steel products are anticipated to persist, putting pressure on the steel makers' profit margins. In the short term, this will likely result in a decline in demand for iron ore.
There have been many supply disruptions around the world. Thus, the supply power is medium to high. The buyer power is low to medium and depends on the industry's needs.
Establishing new mines requires high monetary investments; that's why Barriers to New entrants are high in the Iron ore industry.
The iron ore industry has some significant manufacturers, high investments, and extreme exit bars, so the Intensity of Rivalry is low to medium.
Iron can alter its properties depending upon the end-user industry, and metals created with the use of Iron can be recycled. Considering these two reasons, the threat of Substitutes for Iron ore is low to medium.
The iron ore market is significantly changing thanks to evolving technology. Australia, as the biggest exporter of iron ore, is continuously integrating the technology in truck fleets, drill rigs, and trains, resulting in cost-effective solutions and improved efficiency.
Drones and ROVs aid 3D mapping and equipment inspections and identify potential risks such as rock movement. Moreover, the recent fluctuations in the iron ore market, importation, and exports have caused buyers to trade with suppliers equipped with advanced technology and tools. It is to aid their process of minimizing operational costs, delivery time and streamlining their procurement process.
For more such market data, insights, and intelligence check out Beroe LiVE.Ai.
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