Recovery seen in global iron ore output in H2 CY22

Iron ore production globally is seen climbing markedly during the current July-December half to partly offset the decline during this year's first half, new research from Mysteel suggests. As a result, full year output in 2022 should be largely unchanged from 2021 at around 2.4 billion tonnes.

During the first six months of this year, production of iron ore worldwide declined by 2.7% from H1 last year to 1.188 billion tonnes, according to Mysteel's statistics.

Most of the world's major iron ore-producing countries encountered disruptions in their production during this year's H1, attributed to several factors including the outbreak of conflict between Russia and Ukraine, the resurgence of the COVID-19 pandemic in several countries, and some extreme weather events, according to a Shanghai-based analyst, with Brazil, Russia, Ukraine, China and South Africa being the worst hit.

For example, Brazil, the world's second largest iron ore producer after Australia, saw its iron ore output reach 176 million tonnes in the first half, 10.4 million tonnes or 5.6% lower on year, Mysteel's statistics showed.

Earlier this year in its April-July quarterly report, Brazil's Vale, the world's largest iron ore supplier, revised its annual production guidance for 2022 down from the original 320-335 million tonnes to 310-320 million tonnes.

In making the downward adjustment, the Brazilian mining giant cited multiple adverse factors which occurred during H1 including the sale of its Midwestern System, the impact of an intense rainy season this year, and one-off stockpile homogenization activities in Ponta da Madeira to adjust for moisture levels.

As for non-mainstream countries, they produced a total of 567 million tonnes of iron ore during January-June, lower by 17.9 million tonnes or 3.1% from the same period last year, Mysteel's data indicated. The decline in output among these non-mainstream countries accounted for over half of the global reduction during H1 at some 55%, Mysteel noted.

Among the smaller global ore suppliers, mining companies in Russia and Ukraine saw their iron ore output fall by 11.4% and 27.3% on year to 44.1 million tonnes and 30.1 million tonnes respectively in the first half of this year.

In China meanwhile, Mysteel's survey showed that production of iron ore concentrates totaled 149 million tonnes during H1, falling by 3.6% on year.

Here too, several events at the start of this year combined to negatively impact output. These included China's staging of the Winter Olympic Games held in and around Beijing over February 4-20, the capital's hosting of "Two Sessions" political meetings over March 4-10, and the Paralympic Winter Games in Beijing and Zhangjiakou over March 3-14 - all of which required miners to halt or curb production to help reduce atmospheric pollution while the meets were being held, as Mysteel Global reported.

Nevertheless, Mysteel anticipates that global iron ore output will rebound during this year's present half, and especially in the fourth quarter, many thanks to Brazil's more favorable weather for iron ore mining and some newly-commissioned mining projects across the world.

For example, Vale's H2 iron ore production is forecast to grow by a significant 24.6% from H1 to 172 million tonnes, due to better weather conditions and the ramp-up of production at its S11D project, according to Mysteel.

Meanwhile, the Gudai-Darri, South Flank and Eliwana mine projects in Australia will also help to boost iron ore output this half.

China too is on course to see its iron ore output rise during the July-September quarter, despite power rationing during summer and slack buying among domestic steelmakers.

Indeed, Mysteel estimates that the country's iron ore concentrates output will rise by 12.5% on year to 78.3 million tonnes during October-December, given the commissioning of some mining projects and the goal of the country's "cornerstone plan" to hike iron ore output to 370 million tonnes/year by 2025.

On the other hand, iron ore production from non-mainstream countries may continue to be constrained by the Russia-Ukraine conflict and by mining companies' rising production costs due to higher energy prices, Mysteel noted.

Written by Lea Li, liye@mysteel.com

Edited by Zhenqi Yang, yangzhenqi@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.