High-cost iron ore producers are not shutting down activities as quickly as expected, according to Brazilian mining giant Vale.
Oversupply from the big three global producers, combined with a slowdown in economic growth in China, has sent seaborne iron ore prices tumbling this year. The price slump is forcing high-cost producers to close mines around the world.
"The sharp drop in international iron ore prices has led to the closure of about 50-60Mt/y in high-cost miners' production capacity. But these companies' exit from the market has been slower than expected," director of iron ore and strategy José Carlos Martins said in a conference call to discuss Vale's latest earnings release.
China's iron ore imports reached 699Mt in the first nine months, 16.5% higher year-on-year, according to data from China's customs authority. Brazilian iron ore exports to China in the first nine months of the year jumped 10% to 129Mt, compared to same year-ago period.
"This increase in imports benefitted traditional suppliers (Australia, Brazil and South Africa) at a time when their production expanded, but was not enough to consume inventories of higher cost producers, which nevertheless continued to operate with lower and sometimes even negative margins in the expectation of a gradual recovery in prices," Vale said.
Iron ore production in the third quarter – excluding Vale, BHP Billiton 50:50 JV Samarco's attributable production of 3.8 Mt – was 85.7Mt, the highest output in Vale's history, with gains in all production systems.
Source: www.bnamericas.com |
