Standard Bank report 14th April Low iron ore prices threaten to...

Standard Bank report 14th April
Low iron ore prices threaten to knock out iron ore supplies in China and smaller marginal deposits globally, the report said. 2014 may be the first year of permanent iron ore mine closures for the industry, it said.

Over a quarter of China's 400 million mt annual capacity have costs within the $110-130/dmt CFR China range, along with 20-40 million mt of Indian east-coast supplies, it said.

"These are the first tonnes which will be forced to permanently close, as lower cost seaborne growth tonnes (ex-Australia/Brazil primarily) begin to flex their arbitrage advantages to squeeze out their higher-cost brethren," it said.

In the next few years, sustained capacity additions at brownfield iron ore sites along with new mines may continue to press on prices after 150 million mt of capacity is forecast to be added this year, led by Australia, along with Brazil, Canada and West Africa. The oversupply this year may be 84 million mt.

Standard Bank sees additions to global seaborne capacity in 2015 reaching 190 million mt with Roy Hill, Anglo Minas Rio and several other Brazilian expansions, with a net oversupply of as much as 130 million mt.