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Supply & demand situation of iron ore in H2 2019 remains grim

17 Jul 2019 15:37 reported by Andrew Zhang

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Iron ore prices have risen by more than 60% since the beginning of this year, mainly due to supply constraints caused by the Brazilian mine disaster and the Australian hurricane.

From the supplying view, Vale, Rio Tinto, BHP Billiton and Fortescue Metals Group (FMG), the four major iron ore producers, have formed a substantial oligopoly structure, accounting for 55% of global production.

Vale's output was expected to decline by 32 million tons this year, while Rio Tinto, BHP Billiton and FMG in Australia were expected to decline by about 100 million tons.

Due to the impact of environmental protection policy and safety inspection, China's domestic iron ore production growth rate was limited, and it was unable to fill the supply gap.

Compared with the monopoly pattern of global iron ore supply, the demand for iron ore was relatively scattered. The crude steel output of the top 10 steel enterprises accounts for 25.56% of the total global output, while the remaining iron and steel output accounted for 74.44%.

It can be found that the shortage of supply and demand was still the main logic of the current iron ore market fluctuations.

In the second half of the year, China's iron ore supply has rebounded, but the gap between supply and demand still existed.

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