Iron Ore Market: Key Facts on Production, Consumption and Foreign Trade

04 Jan 2019 • by Natalie Aster
Iron Ore Market: Key Facts on Production, Consumption and Foreign Trade

LONDON – Iron is the fourth most common element occurring in nature (it forms around 5% of the Earth’s crust) and the second most abundant and widely used metal after aluminum. The usage of iron dates back to over 3,000 years, and it still remains an essential material in the modern world – iron is an indispensable component in the manufacturing of a great variety of products and items from paper clips to beams used in construction, automobiles, furniture, locomotives, and many more. The bulk proportion of iron ore volume mined worldwide goes for the manufacturing of steel, which is required to create as well as maintain strong industrial and infrastructural bases.

  • RESERVES

Iron ore is found in nature in the form of rock with the majority of these rocks being either Magnetite or Hematite. At present, the global deposits of iron ore seem quite abundant, but the exponentially increasing consumption can make them quite finite. According to estimations, the world’s overall iron ore reserves are close to 185 billion metric tons (BMT).

Australia boasts the wealthiest iron ore resources across the globe – estimated at some 50 BMT containing nearly 24 BMT of iron content. More than 90% of the Australian identified reserves reside in the western part of the country. Hamersley Province accounts for the biggest chunk of the iron ore deposits in Australia, moreover, this is one of the most abundant iron ore reserves from pole to pole.

Iron ore: structure of worldwide reserves by country, 2017 (in BMT) Iron ore: structure of worldwide reserves by country, 2017 (in BMT)

The second biggest iron ore resources are found in Russia – around 25 BMT containing some 14 BMT.

Brazil possesses the third largest reserves of iron ore across the globe – 23 BMT of crude ore and some 12 BMT of iron content.

  • PRODUCTION

The volume of the world’s iron ore production demonstrated a steady increase during the recent years, registering a CAGR of appr. 5%, and in 2017 it came to 3.36 BMT. The global supply of iron ore is set to continue increasing in the next decade, however, at a sluggish rate of some 0.5%. By 2027, the volume of the world’s production of usable iron ore will likely climb to 3.41 BMT.

Australia tops the list of the global leading iron ore mine producers. Australia’s output of iron ore registered a healthy increase during 2015-2017, and in 2017 reached nearly 880 million metric tons (MMT). The region of Pilbara in Western Australia commands the major chunk (around 95%) of the total domestic iron ore production. Two globally known iron ore behemoths, Rio Tinto and BHP Billiton, are running their operations in the Pilbara region.

Usable iron ore: top 10 producing countries, 2015-2017 (in MMT) Usable iron ore: top 10 producing countries, 2015-2017 (in MMT)

Brazil ranks the second dominant producer of iron ore on the world scale. In 2017, the country produced about 440 MMT of iron ore. The states of Minas Gerais and Para accounts for the biggest proportion of Brazil’s iron ore mining. Some of the world’s largest iron ore mines are located on the territory of Brazil, for instance, Carajas mine owned by Vale S.A. This mine has appr. 7.2 BMT of proven iron ore reserves. Its daily production volume is around 300,000 metric tons.

China takes the third spot on the list of the world’s top producers of iron ore with the output volume of around 340 MMT in 2017. The top provinces engaged in the extraction of crude iron ore in the country are Hebei and Liaoning. Other regions involved in the iron ore mining in China are Beijing, Shanxi, and some areas of Inner Mongolia.

  • CONSUMPTION

The demand from the steel industry performs as the key growth engine of iron ore consumption, as the manufacturing of steel accounts for almost 95% of the overall iron ore consumption. As of 2016, around 2 BMT of iron ore were consumed around the globe. China, India, Japan, Russia, and South Korea are the leading consumers of the material. Amid regions, Asia commands the biggest chunk of the world’s iron ore consumption, followed by Europe and CIS.

Iron ore: structure of global apparent consumption by region, 2017 Iron ore: structure of global apparent consumption by region, 2017

  • EXPORTS & IMPORTS

Exports:

In 2017, over 1.63 BMT of iron ore were exported across the world. In the same year, the value of the global exports came up to USD 94.9 billion – a 30.8% YoY gain.

Australia is responsible for more than 50% of the world’s iron ore export sales. As of 2017, this country exported slightly over 872.7 MMT of iron ore. Meantime, the value of iron ore exported from Australia reached some USD 49.3 billion.

Brazil comes as the second leading exporter of iron ore. The country exported about 383.5 MMT of iron ore in the year 2017, whilst the value of export sales totaled appr. USD 19.2 billion.

5 leading iron ore exporters, 2017 (in MMT)

5 leading iron ore exporters, 2017 (in MMT)

South Africa ranks third on the global arena regarding the iron ore exports. The country exported appr. 66.4 MMT in 2017, which was equivalent to about USD 4.8 billion in value terms.

The fourth position on the list of the major exporters of iron ore is held by Canada with the exports volume of some 41.17 MMT and exports value of nearly USD 3.5 billion.

Ukraine rounded up the top 5 iron ore exporters. Ukraine exported slightly over 34.7 MMT of iron ore in 2017, meantime, the country’s exports were evaluated at around USD 2.6 billion.

Imports

As for imports, more than 1.57 BMT of iron ore were imported across the globe in the year 2017. Meantime, the global import purchases of iron ore hit USD 115.5 billion in the same year.

Asia is the largest importer of iron ore: the region imported over 1.34 BMT of the material in 2017, meanwhile, the value of region’s iron ore purchases climbed to USD 99.2 billion which was equivalent to almost 86% of the world’s total value of iron ore imports. It was followed by the European region with only 160.11 MMT of imported iron ore.

Amid countries, China is the world’s dominant importer of iron ore grabbing a share of over 60% of the world’s total imports. In 2017, the country purchased more than 1 BMT of iron ore, which is equivalent to the value of some USD 76.2 billion.

5 leading iron ore importers, 2017 (in MMT)

5 leading iron ore importers, 2017 (in MMT)

The second major importer of iron ore is Japan. As of 2017, the volume of iron ore imported to this country exceeded 126.5 MMT, whilst the imports value totaled some USD 9.7 billion.

South Korea takes the third place in the world regarding iron ore imports. The country imported around 72.4 MMT of iron ore in 2017, and the value of the country’s import purchases was appr. USD 5.5 billion.

Two more countries in the top 5 iron ore importers include Germany (imports volume – appr. 38.2 MMT, value – USD 3.4 billion) and the Netherlands (imports volume – some 28 MMT, value – USD 2.4 billion).

  • MARKET FUTURE OUTLOOK

The slowdown of the world’s economic upturn over recent years also had a certain negative influence on the iron ore industry, which, however, managed to maintain a relatively optimistic performance. In the offing, the world iron ore market is slated to continue experiencing healthy growth but at a sluggish CAGR – appr. 2-3%. A remarkable uptake in the seaborne trade is poised to act as an important market growth driver. Besides, growth in this market will be encouraged by the expanding production capacities along with the starting of new mining units in the emerging countries with the largest contribution from India, Turkey, Russia, and some countries of the Latin American region. However, the iron ore market will also face a number of challenges as well, amid them: the rising usage of recycled steel that influences the demand for iron ore, certain anti-dumping duties associated with steel products in some regions, the requirement of huge capital investments, and land-use conflicts in some developing countries.

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