Global iron ore market to face a widening supply surplus in 2024: BHP

Mysteel Global: BHP, the world's top mining company, expects the global iron ore market to face a widening supply surplus this year and one that will likely stretch into 2025, the Melbourne-based miner warned in its latest economic and commodity outlook released on Tuesday.

Evidence of an ongoing supply surplus of iron ore is clear from the elevated levels of ore inventories at the ports of China, the world's largest consumer of the commodity, the miner highlighted. Indeed, Mysteel's tracking of China's 45 major ports showed that their combined stocks of imported iron ore had exceeded 150 million tonnes (mnt) by late July to touch a more-than-two-year high- and continue to hover above this level.

Behind the accumulation of imported iron ore supplies in China has been the protracted slump in the country's property sector, the largest steel-consuming sector in China and thus, a major source of demand for iron ore, Mysteel Global noted.

During this year's January-June half (H1CY'24), global iron ore prices generally traded within the range of $100-120/tonne (t) on a 62% Fe CFR, BHP calculated. The company is keeping its estimate of real-time cost support for iron ore unchanged at $80-100/t CFR, citing high costs borne by Australian and Brazilian miners, the cost-effectiveness of China's domestic iron ore and lower-grade Indian exports.

For future iron ore demand, BHP believes that China's crude steel production has plateaued above 1 billion tonnes (bnt), which is likely to persist across the mid-2020s, with more scrap being used in the steelmaking process. This means China's demand for iron ore is expected to slow further in the coming year, though the decline will be offset to some extent by the steel production growth in India and Southeast Asia, the company concluded.

Note: This report has been written in accordance with an article exchange agreement between MySteel Global and BigMint.