NIPPON STEEL TECHNICAL REPORT No.
123 March 2020
UDC 622 . 341 . 1
Review
Outlook of Iron Ore Supply
Tetsuya SHIODA*
Abstract
Since iron ore quality has deteriorated and the price has become volatile, it’s becoming
more and more important to develop and expand the technology to cope with these issues
quickly and flexibly.
1. Introduction
The world crude steel production increased 2.1 times over the
20-year period from 1997 to 2017, reaching 1 690 million tons (Mt,
all the units herein being metric); China is responsible for 81% of
the increase. During the same period, the world iron ore consump-
tion grew 2.5 times to reach 2 100 Mt, and in response, the world to-
tal production of iron ore increased from 850 Mt to 2 160 Mt. As
much as 84% of the increment went to the seaborne market, which
invited 3.3 times expansion of the volume of iron ore in the sea-
borne market during the period, with China’s import accounting for
92% of the increase. Consequently, China’s share in the iron ore
seaborne market rapidly grew from 12 to 68%, making the presence
of the country in the international market overwhelming (see Fig. 1).
2. Change in Iron Ore Quality
The iron ore production of the two major supplier countries,
Australia and Brazil, increased 3.8 times from 350 Mt to 1 320 Mt
over the same 20-year period. To make this happen, mining compa-
nies of these countries developed new deposits, expanded their ex-
cavation volume by capacity increase, and enhanced their land
transport and port loading capacities by heavily investing in infra-
structures. In addition, they improved the efficiency of ore handling
by consolidating ore brands to blend and standardized ore qualities
so eventually they were able to blend low grade ores that used to be
held in-house. As a result, the average Fe content of iron ore has de-
creased by approximately 2.0% over the last ten years.
The decrease of the Fe content is more conspicuous with high-
grade ore brands, and consequently, flexibility for steel mills to se-
lect supply sources has been reduced. Accordingly, steel mills are in Fig. 1 Comparison of supply-demand balance between 1997 and 2017
(based on WSA yearbook)
need of increasing the mixing ratio of beneficiated ultra-fine ore for
sinter feed in order to maintain the quality of sintered ore (see Fig.
2). known as “the benchmark pricing”), has come to be set based on the
price index publicized daily (“the index pricing”) since April, 2010.
3. Change in Iron Ore Market Trend As a result, the iron ore price has become sensitive to the supply and
The iron ore price, which was determined every year through demand balance in the seaborne market and more volatile within a
negotiations between purchasers and suppliers (the method being short-term period. Recently, the price has been fluctuating within a
* General Manager, Mineral Resources Research, Raw Materials Div.-II
2-6-1 Marunouchi, Chiyoda-ku, Tokyo 100-8071
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NIPPON STEEL TECHNICAL REPORT No. 123 March 2020
relatively high range because of the steady demand from the Chi-
nese steel mills and temporal supply disruption (see Fig. 3).
In addition to the high price of iron ore, the price premiums of
lump ore and pellets have also been rising accompanied by big vola-
tility. That is because 1) Chinese steel mills are in need of using
high-grade iron ore, which is a countermeasure to the country’s
stricter environmental regulations, and 2) Chinese steel mills need
to enhance productivity corresponding to the production regulation
for sintering plants. (see Fig. 4).
4. Future Prospect
Fig. 2 Change in total Fe contents of Australian and non-Australian ore The collapses of the tailing pond dams of Brazilian iron ore
brands (averages of Nippon Steel’s purchase) mines in 2015 and 2019 and enactment of stricter environmental
regulations are inviting an increasing number of mines to newly
adopt dry ore treatment. Consequently, steel mills have become con-
cerned about further decrease of the Fe content of fine and high-
grade lump ores. In addition, pisolite deposits (low-alumina and
low-phosphorus ore) and the low-phosphorus Brockman deposits,
both in the Pilbara region, Australia, will run out before long.
Hence, the supply and demand balance of high-grade iron ore is ex-
pected to become much tighter. Moreover, the blending of ores orig-
inating from different mines is expected to advance further, which is
a result of miners’ improving activities such as supply chain stream-
lining and enhancement of effective use of mineral resources. As a
Fig. 3 Change in iron ore price consequence of those, adverse effects on blast furnace operation are
a concern due to the Fe contents standardization of iron ores and the
composition change of iron ore that is charged to blast furnaces.
Meanwhile, steel mills must keep a careful watch on the production
level of Chinese steel mills that has an overwhelming influence on
the global iron ore market and the trends of their domestic use of
scrap metals that is expected to increase from now on.
5. Conclusion
There are many uncertainties in the worldwide iron ore market
as explained above. To maintain the competitiveness of our steel
products under such situation, it is essential to further strengthen the
technology to quickly and flexibly respond to the changes in the
quality and market price of iron ore.
Fig. 4 Change in premiums for high-grade fine ore, lump ore, and pellets
Tetsuya SHIODA
General Manager, Mineral Resources Research
Raw Materials Div.-II
2-6-1 Marunouchi, Chiyoda-ku, Tokyo 100-8071
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