Iron Ore Markets Forecast Till 2025

August 2013 | 180 pages | ID: I014DA33491EN
Metal Expert Consulting

Abstracts

The report presents the results of the research into the global, Chinese, Russian and Ukrainian markets for iron ore.

The main assumptions made in the research as well as the key conclusions as to the prospects for the global iron ore market, its dependence on China, consequences for Russian and Ukrainian exporters are given in Introduction. The ways of cutting the cost of iron ore transportation from Russia to the global market are shown.

The global iron ore market analysis, including the actual and forecast demand-supply and global trade balance, analysis of the key suppliers’ costs, is presented in Global Market, the first section of the report. The market of the world’s largest iron ore consumer and producer – China – is examined in detail. The outlook for iron ore demand and production growth in China as well as possibilities of buying raw materials from incorporated assets located abroad is analyzed. The offered global iron ore price forecast is compared with the consensus forecast of the largest investment companies and sectoral analysts.

Iron ore supplies to Russian steelmakers are examined in Russia, the second section. Ore availability to the key consumers is assessed, the existing long-term contracts and possibility of buying diversification are analyzed. The forecast of the Russian market balance and iron ore export prospects is based also on the provided iron ore production, beneficiation and transportation cost estimates.

The main trends in the Ukrainian iron ore market, including ore availability to holdings and the free market capacity, are covered in Ukraine, the third section. The outlook for exports of Ukrainian iron ore is assessed with special attention.

The sources of the information on prices and volumes used in the research are official statistics (Russia’s Federal State Statistics Service, Kazakhstan’s Statistics Agency, Ukraine’s State Statistics Service, China’s National Bureau of Statistics, customs statistics of the mentioned countries), data from companies focusing on mining and metallurgical industry (Rudprom, MySteel, TexReport, Platts, ISSB, Metal Expert, ABARE, Worldsteel), from international institutions and organizations (WorldBank, IMF, EIA, IEA), from investment companies and banks (ABN AMRO, ANZ, BMO, CIMB Group, Citigroup Inc., Commonwealth Bank, Credit Suisse, Deloitte Access Economics, Deutsche Bank, ETLA, Goldman Sachs, HSBC, IHS Global Insight, Investec, J.P. Morgan, KPMG, Liberium Capital, Macquarie Bank, Merill Lynch, Morgan Stanley, National Australia Bank, Numis, RBC Capital Markets, Renaissance Capital, Standard Bank, UBS, VTB Capital, Westpac, Wilson HTM).

The report can be used by managers and experts of steelmaking, raw material and transportation companies, who are engaged in sales, procurement, marketing, strategic planning activities, by investment companies as well as everyone interested in gaining a deep insight into processes currently taking place in iron ore markets, getting independent and well-grounded forecast of changes in the markets.

The results are to help identify risks and new opportunities in iron ore purchases, build an effective purchase strategy and ensure stabler raw material supply, find potentially attractive markets and new opportunities in iron ore procurement, analyze competitors' costs, estimate and forecast direction, volumes and structure of raw material flows, identify raw material assets attractive for investments.

The research consists of the pdf-report and detailed statistical supplement in Excel that includes:

• statistics on global iron ore production and trade for 2008-2012;
• the key price indicators in the markets of China, Russia and Ukraine for 2008-2012 (domestic, export, import prices on a monthly and yearly basis);
• detailed statistics on volumes in the Russian and Ukrainian iron ore markets (by segments and companies), including the free market;
• estimate of iron ore production costs and transportation to the key consumers;
• forecasts of the key price and volume indicators.

The report includes 174 pages with 128 tables and 38 figures. Excel supplement to the report includes 49 pages.

Contents

SUMMARY

INTRODUCTION

1. GLOBAL MARKET

1.1 Prospects of global economy and major steel markets
1.2 Global iron ore production
1.3 Global iron ore trade
  1.3.1 Export
  1.3.2 Import
1.4 New capacities
1.5 Iron ore production cost
1.6 Chinese market
  1.6.1 Steel market trends
  1.6.2 Peculiarities of Chinese iron ore market
  1.6.3 Consumption and import of iron ore
  1.6.4 China’s investment into foreign iron ore assets and local ports
  1.6.5 Iron ore production in China
  1.6.6 Forecast of iron ore market balance
  1.6.7 Prices
1.7 Forecast of global iron ore market balance
1.8 Forecast of iron ore prices
  1.8.1 Consensus forecast of investment banks
  1.8.2 Metal Expert Consulting’s forecasting technique

2. RUSSIAN MARKET

2.1 General trends of pig iron and steel market
2.2 Peculiarities of Russian iron ore market
2.3 Iron ore production
  2.3.1 Iron ore producers
  2.3.2 Metalloinvest
    2.3.2.1 Mikhailovsky GOK
    2.3.2.2 Lebedinsky GOK
    2.3.2.3 Ural Steel
    2.3.2.4 OEMK
  2.3.3 Mechel
    2.3.3.1 Korshunov Mining Plant
    2.3.3.2 Chelyabinsk Metallurgical Plant
  2.3.4 EVRAZ
    2.3.4.1 EVRAZ KGOK
    2.3.4.2 Evrazruda
    2.3.4.3 EVRAZ VGOK
    2.3.4.4 ZSMK
    2.3.4.5 NKMK
    2.3.4.6 NTMK
  2.3.5 NLMK
    2.3.5.1 Stoilensky GOK
  2.3.6 MMK
    2.3.6.1 Bakalskoye Rudoupravleniye
  2.3.7 Severstal
    2.3.7.1 Karelsky Okatysh
    2.3.7.2 Olcon
  2.3.8 KOKS Group
    2.3.8.1 Tulachermet
    2.3.8.2 KMAruda
  2.3.9 EuroChem
    2.3.9.1 Kovdorsky GOK
  2.3.10 Krasnokamenskoye Mine Administration
  2.3.11 Ural Mining and Metallurgical Company (UMMC)
    2.3.11.1 Bogoslovskoye Mine Administration
  2.3.12 Pervouralskoye Rudoupravleniye
  2.3.13 Metal Group
    2.3.13.1 Yakovlevsky mine
  2.3.14 New iron ore producers in Russia
2.4 Iron ore consumption
  2.4.1 Self-sufficiency of key consumers in iron ore
    2.4.1.1 MMK
    2.4.1.2 NLMK
    2.4.1.3 EVRAZ
    2.4.1.4 Mechel
    2.4.1.5 Metalloinvest
    2.4.1.6 KOKS Group
    2.4.1.7 Kosaya Gora Iron Works
    2.4.1.8 Severstal
2.5 Prices
  2.5.1 Peculiarities of price formation in Russian iron ore market
  2.5.2 Iron ore prices in Russia
  2.5.3 Peculiarities of Russian iron ore export price
2.6 Iron ore production cost in Russia
2.7 Forecast of iron ore consumption in Russia
2.8 Forecast of iron ore output and export
2.9 Transport issues
  2.9.1 Railway infrastructure
  2.9.2 Rolling stock
  2.9.3 Port infrastructure
  2.9.4 Transportation cost

3. UKRAINIAN MARKET

3.1 General trends of pig iron and steel market
3.2 Peculiarities of Ukrainian iron ore market
3.3 Iron ore production
  3.3.1 Producers
  3.3.2 Metinvest
    3.3.2.1 Northern GOK
    3.3.2.2 Central GOK
    3.3.2.3 Ingulets GOK
    3.3.2.4 Kryvyi Rih Iron Ore Plant
    3.3.2.5 Zaporizhzhya Iron Ore Combined Works
    3.3.2.6 Yuzhny GOK
    3.3.2.7 Azovstal
    3.3.2.8 Yenakiieve Iron and Steel Works
    3.3.2.9 Ilyich Iron and Steel Works
    3.3.2.10 Zaporizhstal
  3.3.3 ArcelorMittal Kryvyi Rih
  3.3.4 Industrial Union of Donbass
    3.3.4.1 Alchevsk Iron and Steel Works
    3.3.4.2 Dneprovsky Metallurgical Plant
  3.3.5 Ferrexpo
    3.3.5.1 Ferrexpo Poltava Mining
    3.3.5.2 Vostok Ruda
  3.3.6 EVRAZ
    3.3.6.1 EVRAZ Sukha Balka
  3.3.7 New iron ore producers in Ukraine
3.4 Self-sufficiency of key producers in iron ore
  3.4.1 Metinvest
  3.4.2 ArcelorMittal Kryvyi Rih
  3.4.3 Industrial Union of Donbass
  3.4.4 Ferrexpo
  3.4.5 EVRAZ
  3.4.6 Donetsksteel
3.5 Iron ore prices in Ukraine
3.6 Iron ore production cost
3.7 Forecast of iron ore consumption in Ukraine
3.8 Forecast of iron ore output and export
3.9 Transport
  3.9.1 Port infrastructure
  3.9.2 Railway infrastructure
  3.9.3 Iron ore transportation costs

Figures & Tables

LIST OF FIGURES AND TABLES

SUMMARY

Figure 1. Forecast of global steel output till 2025, mt
Figure 2. Forecast of global iron ore import till 2025, mt
Figure 3. Metal Expert Consulting’s forecast of global iron ore prices
Figure 4. Cost curve of iron ore fines and concentrate supply in 2012, $/t, CFR/EXW China
Figure 5. Forecast of iron ore export from Russia till 2025, mt
Table 1. Estimate of cost reduction potential for Russian concentrate transportation to China, $/t

GLOBAL MARKET

Table 1.1. Trends in major world’s economies in H1 2013
Table 1.2. Two scenarios for global economy development
Figure 1.1. Forecast of economic development (real GDP, % y-o-y)
Table 1.3. Long-term economic growth forecast
Figure 1.2. Forecast of global steel output till 2025, mt
Table 1.4. Global iron ore output in 2008-2013, mt
Figure 1.3. Global iron ore trade in 2008-2013, mt
Table 1.5. Global export of concentrate and sintering ore in 2008-2013 and export potential estimate, mt
Table 1.6. Global export of pellets and sinter in 2008-2013 and export potential estimate, mt
Table 1.7. Global import of concentrate and sintering ore in 2008-2013, mt
Table 1.8. Global import of pellets and sinter in 2008-2013, mt
Table 1.9. Capacity growth in concentrate and sintering ore, mt
Table 1.10. Capacity growth in pellets and sinter, mt
Figure 1.4. Cost curve of iron ore fines and concentrate supply in 2012, $/t, CFR/EXW China
Figure 1.5. Global crude steel output in 2000-2013, ‘000 t
Figure 1.6. Global pig iron output in 2000-2013, ‘000 t
Figure 1.7. Comparison of GDP and steel consumption in China
Table 1.11. Crude steel and finished steel products consumption in China in 2002-2012, mt
Figure 1.8. Apparent and real steel consumption in China, mt
Figure 1.9. Forecast of crude steel consumption in China till 2025, mt
Figure 1.10. Pig iron output in China in 2012 by province, mt
Table 1.12. Consumption and self-sufficiency in iron ore in Chinese provinces in 2012, ‘000 t
Table 1.13. Iron ore import in China in 2006-2013, mt
Table 1.14. China’s investment into foreign iron ore assets
Table 1.15. China’s investment into local ports
Table 1.16. China’s iron ore mining by province, ‘000 t
Figure 1.11. Iron ore mining in China’s provinces in 2012, mt
Figure 1.12. Forecast of old scrap production in China and its consumption for crude steel mak-ing, mt
Figure 1.13. Forecast of crude steel and pig iron output in China in 2013-2025, mt
Table 1.17. Forecast of Chinese iron ore market balance till 2025, mt
Figure 1.14. Domestic (EXW) and import (CFR) prices for iron ore in China, $/t
Table 1.18. Iron ore prices in China in 2008-2013, $/t
Table 1.19. Long-term contracts between Chinese companies and iron ore producers
Table 1.20. Forecast of global iron ore production and consumption till 2025, mt
Table 1.21. Benchmark forecasts of iron ore prices in global markets of industrial and financial companies, $/t
Table 1.22. Consensus forecast of iron ore prices in global markets of industrial and financial companies, $/t
Figure 1.15. Comparison of Metal Expert Consulting’s forecast of global iron ore prices and consensus forecasts of investment banks, $/t
Figure 1.16. Metal Expert Consulting’s forecast of global iron ore prices
Figure 1.17. Sample of iron ore producers selection in cost curve by category (by example of 2012 data)

RUSSIAN MARKET

Figure 2.1. Crude steel and pig iron output in Russia in 2004-2012, mt
Table 2.1. Sintered iron ore market structure in Russia in 2006-2013, ‘000 t
Table 2.2. Non-sintered iron ore market structure in Russia in 2006-2013, ‘000 t
Figure 2.2. Location of Russian ore mining and steelmaking companies
Table 2.3. Average Fe content in iron ore of Russian mining companies, %
Table 2.4. Mikhailovsky GOK: chemical composition, %
Table 2.5. Mikhailovsky GOK: iron ore production and export dynamics, ‘000 t
Table 2.6. Lebedinsky GOK: chemistry composition, %
Table 2.7. Lebedinsky GOK: iron ore production and export dynamics, ‘000 t
Table 2.8. Ural Steel: iron ore production dynamics, ‘000 t
Table 2.9. OEMK: iron ore production dynamics, ‘000 t
Table 2.10. Korshunov Mining Plant: chemistry composition, %
Table 2.11. Korshunov Mining Plant: iron ore production and exports, ‘000 t
Table 2.12. Chelyabinsk Metallurgical Plant: iron ore production dynamics, ‘000 t
Table 2.13. EVRAZ KGOK: chemistry composition, %
Table 2.14. EVRAZ KGOK: iron ore production and export dynamics, ‘000 t
Table 2.15. Evrazruda: iron ore production dynamics, ‘000 t
Table 2.16. EVRAZ VGOK: iron ore production and export dynamics, ‘000 t
Table 2.17. EVRAZ: iron ore production dynamics, ‘000 t
Table 2.18. NLMK: iron ore production dynamics, ‘000 t
Table 2.19. Stoilensky GOK: chemistry composition, %
Table 2.20. Stoilensky GOK: iron ore production and export dynamics, ‘000 t
Table 2.21. MMK: iron ore production dynamics, ‘000 t
Table 2.22. Bakalskoye Rudoupravleniye: iron ore production dynamics, ‘000 t
Table 2.23. Severstal: iron ore production dynamics, ‘000 t
Table 2.24. Karelsky Okatysh: chemistry composition, %
Table 2.25. Karelsky Okatysh: iron ore production and export dynamics, ‘000 t
Table 2.26. Olcon: chemistry composition, %
Table 2.27. Olcon: iron ore production and export dynamics, ‘000 t
Table 2.28. Tulachermet: iron ore production dynamics, ‘000 t
Table 2.29. KMAruda: iron ore production dynamics, ‘000 t
Table 2.31. Kovdorsky GOK: chemistry composition, %
Table 2.31. Kovdorsky GOK: iron ore production and export dynamics, ‘000 t
Table 2.32. Krasnokamenskoye Mine Administration: iron ore production dynamics, ‘000 t
Table 2.33. Bogoslovskoye mine administration: iron ore production dynamics, ‘000 t
Table 2.34. Pervouralskoye Rudoupravleniye: iron ore production dynamics, ‘000 t
Table 2.35. Yakovlevsky mine: iron ore production dynamics, ‘000 t
Table 2.36. Pig iron production in Russia in 2004-2012, '000 t
Table 2.37. Demand structure of pellets and sinter in Russia in 2008-2012, mt
Table 2.38. Demand structure of concentrate and sintering ore in Russia in 2008-2012, mt
Table 2.39. Self-sufficiency of Russian producers in pellets
Table 2.40. Self-sufficiency of Russian producers in concentrate
Table 2.41. Self-sufficiency of Russian producers in sintering ore
Table 2.42. MMK: long-term contracts for iron ore supply
Table 2.43. NLMK: long-term contracts for iron ore supply
Table 2.44. ZSMK: long-term contracts for iron ore supply
Table 2.45. Mechel: long-term contracts for iron ore supply
Table 2.46. Tulachermet: long-term contracts for iron ore supply
Table 2.47. Kosaya Gora Iron Works: long-term contracts for iron ore supply
Table 2.48. Severstal: long-term contracts for iron ore supply
Figure 2.3. Domestic and export prices for iron ore in Russia, $/t
Table 2.49. Iron ore prices in Russia in 2008-2013
Figure 2.4. Estimate of iron ore production cost in Russia in 2012
Figure 2.5. Estimate of concentrate production cost in Russia in 2012
Figure 2.6. Estimate of pellet production cost in Russia in 2012
Figure 2.7. Cost curve of iron ore fines and concentrate supply in 2012, $/t, CFR/EXW China
Table 2.50. Forecast of pig iron output in Russia till 2025, mt
Table 2.51. Forecast of HBI/DRI output in Russia till 2025, mt
Table 2.52. Forecast of pellets and sinter consumption in Russia till 2025, mt
Table 2.53. Forecast of concentrate and sintering ore consumption in Russia till 2025, mt
Table 2.54. Iron ore export from Russia to China by cross-border region, mt
Figure 2.8. Distance from major iron ore suppliers to Chinese border
Table 2.55. Forecast of output and export of pellets and sinter in Russia till 2025, mt
Table 2.56. Forecast of output and export of concentrate and sintering ore in Russia till 2025, mt
Figure 2.9. Scheme of new railway lines construction in Russia
Table 2.57. Forecast of key indicators for rail transport in Russia
Figure 2.10. Russia’s freight rolling stock structure by useful life and type of car as of beginning of 2013
Table 2.58. Structure of Russian open-top cars and pellet wagons market, beginning of 2013, units
Table 2.59. Iron ore freight structure in Russia, 2012, ‘000 t
Figure 2.11. Ownership structure of rail cars servicing iron ore exports, 2012
Table 2.60. Freight rail transport rolling stock targets (pool required, units)
Table 2.61. Forecast of port facilities commissioning in Russia till 2030 (capable to contribute to iron ore export growth)
Table 2.62. Forecast of iron ore transshipment at sea ports of Russia till 2030, mt
Table 2.63. Estimate of cost of iron ore transportation in open-top wagons in Russia in H1 2013, $/t
Table 2.64. Estimate of cost of iron ore transportation in pellet wagons in Russia in H1 2013, $/t

UKRAINIAN MARKET

Figure 3.1. Crude steel and pig iron output in Ukraine in 2004-2012, mt
Table 3.1. Market structure of pellets in Ukraine in 2004-2013, ‘000 t
Table 3.2. Market structure of sinter in Ukraine in 2004-2013, ‘000 t
Table 3.3. Market structure of concentrate in Ukraine in 2004-2013, ‘000 t
Table 3.4. Market structure of sintering ore in Ukraine in 2004-2013, ‘000 t
Table 3.5. Average Fe content in Ukrainian iron ore, %
Table 3.6. Northern GOK: chemical composition, %
Table 3.7. Northern GOK: iron ore production and export dynamics, ‘000 t
Table 3.8. Central GOK: chemical composition, %
Table 3.9. Central GOK: iron ore production and export dynamics, ‘000 t
Table 3.10. Ingulets GOK: chemical composition, %
Table 3.11. Ingulets GOK: iron ore production and export dynamics, ‘000 t
Table 3.12. Kryvyi Rih Iron Ore Plant: chemical composition, %
Table 3.13. Kryvyi Rih Iron Ore Plant: iron ore production and export dynamics, ‘000 t
Table 3.14. Zaporizhzhya Iron Ore Combined Works: chemical composition, %
Table 3.15. Zaporizhzhya Iron Ore Combined Works: iron ore production and export dynamics, ‘000 t
Table 3.16. Yuzhny GOK: chemical composition, %
Table 3.17. Yuzhny GOK: iron ore production and export dynamics, ‘000 t
Table 3.18. Azovstal: iron ore production dynamics, ‘000 t
Table 3.19. Yenakiieve Iron and Steel Works: iron ore production dynamics, ‘000 t
Table 3.20. Ilyich Iron and Steel Works: iron ore production dynamics, ‘000 t
Table 3.21. Zaporizhstal: iron ore production dynamics, ‘000 t
Table 3.22. ArcelorMittal Kryvyi Rih: iron ore production and export dynamics, ‘000 t
Table 3.23. Alchevsk Iron and Steel Works: iron ore production dynamics, ‘000 t
Table 3.24. Table 3.24. Dneprovsky Metallurgical Plant: iron ore production dynamics, ‘000 t
Table 3.25. Ferrexpo Poltava Mining: chemical composition, %
Table 3.26. Ferrexpo Poltava Mining: iron ore production and export dynamics, ‘000 t
Table 3.27. Vostok Ruda: iron ore production dynamics, ‘000 t
Table 3.28. EVRAZ Sukha Balka: chemical composition, %
Table 3.29. EVRAZ Sukha Balka: iron ore production and export dynamics, ‘000 t
Table 3.30. Self-sufficiency of Ukrainian producers in pellets
Table 3.31. Self-sufficiency of Ukrainian producers in concentrate
Table 3.32. Self-sufficiency of Ukrainian producers in sintering ore
Figure 3.2. Domestic, export and import prices for iron ore in Ukraine, $/t
Table 3.33. Iron ore prices in Ukraine in 2008-2013, $/t
Table 3.34. Iron ore production cost in Ukraine in 2012, $/t
Figure 3.3. Cost curve of ore fines and concentrate supply in 2012, $/t, CFR/EXW China
Table 3.35. Forecast of pig iron output in Ukraine till 2025, mt
Table 3.36. Forecast of pellets and sinter consumption in Ukraine till 2025, mt
Table 3.37. Forecast of concentrate and sintering ore consumption in Ukraine till 2025, mt
Table 3.38. Forecast of output and export of pellets and sinter, mt
Table 3.39. Forecast of output and export of concentrate and sintering ore, mt
Figure 3.4. Scheme of Port Yuzhny development
Figure 3.5. Scheme of Ukrainian railways
Table 3.40. Major railway sector development projects
Table 3.41. Estimate of cost of iron ore transportation in open-top wagons in Ukraine in H1 2013, $/t
Table 3.42. Estimate of cost of iron ore transportation in pellet wagons in Ukraine in H1 2013, $/t