Posted on 28 Aug 2024
Global miner BHP anticipates a widening surplus in the iron ore market on average across 2024, with supply likely to continue to outpace demand into 2025, Kallanish notes,
The firm says in a statement that for the balance of 2024 and into 2025, it expects supply from low-cost major iron ore producers to grow while iron ore consumption is experiencing a modest decline.
"Should surpluses persist as it forecasts, it would expect some high-cost suppliers to be driven out of the market over time," BHP says. Its estimate of real-time cost support continues to sit in the $80–100/tonne range on a 62% Fe CFR basis.
BHP has foreseen China’s demand for iron ore to be lower than it is today in the medium term. This is because the country is moving beyond the crude steel production plateau and the ratio of scrap-based steelmaking is rising.
The firm maintains its view that China’s steel production has plateaued above 1 billion tonnes and this is likely to continue across the mid-2020s. However, Chinese pig iron production is expected to decline during this period with more recycled scrap used in steelmaking.
"How quickly and effectively the Chinese policies targeted at the property sector stabilise it, and the government’s approach to regulating steel production, will both be large swing factors for the remainder of 2024 and into 2025," the company says.
BHP, however, expects demand for its products in other developing Asia to offset the falling demand in China to a degree. Over the next two years, it expects a small improvement in global steel production with growth led by India and Southeast Asia, with some additional growth from a recovery in developed regions.
The firm plans to increase production at Western Australia Iron Ore (WAIO) to more than 305 million tonnes/year over the medium term, underpinned by the Port Debottlenecking Project 1 (PDP1) and Rail Technology Programme (RTP1).
BHP is assessing options to grow its WAIO production up to 330mt/y if market conditions warrant, including studying optimal mine and infrastructure configurations and potentially increasing ore beneficiation. It expects to complete these studies in 2025.
In Brazil, the company says Samarco is set to almost double production through the restart of a second concentrator in the third quarter of fiscal year 2025.
Source:Kallanish
