Iron ore will not see much of a recovery in 2015 after falling to its lowest level since 2009 earlier this year. With the commodity currently only managing to trade at around $60 per ton, market analysts say this is going to be the case for the foreseeable future. Speaking at the annual Mining Indaba in Cape Town recently Roger Emslie, principal metals and mining consultant for Wood Mackenzie, said there was little to suggest the picture would change during 2015. “We have to remember that demand is slower and not necessarily lower,” he said. “It is hard to believe but 2015 has started even worse than 2014 finished. Having commenced January with iron ore prices above the $70-per-ton mark, the commodity has seen yet another price reduction.” Iron ore has systematically been losing ground over the past few years, having dropped from highs of $180 per ton. He said with the iron ore market remaining oversupplied the price forecast was being set around $70-per-ton for the year. “It remains difficult to make a positive case for prices in the short term. Chinese steel mills have cut production in recent weeks due to a combination of weak demand and planned maintenance and this is feeding through directly to iron ore requirements.” He said with the imminent holidays in China steel production was set to get worse before it got better. “It is a slightly better picture in the second quarter when the Chinese mills are expected to pick up production.” Asked about the impact of the low commodity price on iron ore producers, Emslie said it was inevitable that more closures would take place. “We are forecasting more closures and more asset write-downs. As recent announcements show there’s only so far that cost cutting can go before difficult decisions need to be taken concerning the longterm viability of a mine in a structurally oversupplied market.” He said with China importing some 66% of the global total of iron ore, the Asian powerhouse was controlling what was happening in the market. INSERT With China importing some 66% of the global total of iron ore, the Asian powerhouse is controlling what is happening in the market. – Roger Emslie
