Iron ore prices slump on improved supply, lower demand

November 12, 2021 04:18 PM AEDT | By Arpit Verma

Iron ore prices slump on improved supply, lower demand — Image source: Falling iron ore prices | Source: © Argus456 | Megapixl.com

Improved supplies

While glancing on the supply side, improved production growth from Australia and Brazil have started to loosen tight supplies on the seaborne market. However, Brazilian miner Vale SA may take a longer time to return to pre-Brumadinho dam collapse capacity levels.

The miner is currently working at a production capacity of 330Mt. Vale’s Q1 2021 iron ore production was 68Mt, nearly 14.2% above Q1 2020 production.

FMG Group

FMG Group | Source: © Timonschneider | Megapixl.com

Additionally, Fortescue Metals Group has also beaten its full-year shipment estimate in FY21 with a total volume of 182Mt.

While looking at the long-term outlook, iron ore prices are expected to follow a multi-year downtrend, as per the Fitch estimates.

Fitch forecasts that the prices of iron ore will decline from an average of US$155 per tonne in 2021 to US$65 per tonne in 2025.

Bottom Line

Iron ore prices tumbled to record low levels on the back of lower demand in China due to steel production curbs on environmental concerns and an improved supply from the iron ore producing nations.

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