Despite it being the height of summer, steel companies are experiencing a chilling reality in the steel industry. On August 13, the “China Baowu Report” published a commentary article stating that the steel industry is facing a more severe and complex operating situation compared to last year. The article emphasizes that the “long cycle,” “reduction,” and “structural adjustment” characteristics are becoming more prominent, and this round of steel industry “winter” may last longer and be more challenging than expected.
Similarly, on August 15, Angang Steel Group held an economic operation analysis meeting, highlighting that the current steel industry situation is more severe than in 2008 and 2015. The meeting warned that the company would face unprecedented difficulties and challenges.
The grim outlook of the steel industry is already impacting the upstream iron ore industry. Since the beginning of this year, the price of iron ore has plummeted by over a third, and the market value of the world’s “Big Four” iron ore miners—BHP, Rio Tinto, Vale, and Fortescue Metals Group—has collectively shrunk by about $100 billion.
Vivek Dhar, head of mining and energy research at Commonwealth Bank of Australia, stated that “financial markets have reason to worry that iron ore prices may stay below $100 per ton in the short term.”
The iron ore industry, long a “cash cow” for global mining giants like BHP and Rio Tinto, is now feeling the chill of the steel industry’s downturn. Until recently, many mining executives seemed unconcerned about the decline in demand. Rio Tinto’s CEO, Jakob Stausholm, mentioned last month that even if China’s steel demand drops by 100 million tons, the energy transition from 2020 to 2023 has added 40 million tons of growth. However, recent industry movements may have forced mining giants to respond.
Analysts suggest that large mining groups may strictly manage production to prevent a deep collapse in iron ore prices. Australia and Brazil’s shipment volumes have already begun to slow, with July data indicating a sharp decline.
Previously, BHP and Vale’s iron ore production reached record levels in the first half of 2024, leading to increased iron ore inventories at Chinese ports. Data from SteelHome shows that iron ore inventories at Chinese ports have grown by 28% year-on-year to 154 million tons.
Bernstein mining analyst Bob Brackett stated, “Iron ore is a very organized industry. The global mining giants control their supply chains. Just as OPEC doesn’t flood the market with oil, if the market doesn’t need their iron ore, they will slow down production.”
Among the major iron ore miners, Fortescue’s stock price is expected to be hit the hardest, as over 90% of the company’s revenue comes from iron ore. Citi analyst Paul McTaggart described the company’s exposure to this commodity as “problematic.”
Of course, the situation is likely even more challenging for small and medium-sized mining companies than for the Big Four.
[Source – 上海有色网] 钢企“严冬”警告此起彼伏！全球四大铁矿石矿商市值蒸发逾千亿美元 https://news.smm.cn/news/102911675
