UNCTAD
Multi-Year Expert Meeting on Commodities
and Development 2013
Recent developments and new challenges in commodity markets, and policy
options for commodity-based inclusive growth and sustainable development
Room XXVI
Palais des Nations
Geneva, Switzerland
Recent developments and outlook in the iron ore market
by
Virgilio Gaggiato
Business Intelligence Manager, Samarco Iron Ore Europe BV
The Netherlands
20 MARCH 2013
This material has been reproduced in the language and form as it was provided. The views expressed are those of
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Commodities and Development
Recent developments and outlook in the iron ore market
March 20-21
Virgílio Gaggiato
Iron Ore Market
1º Characteristic: Low level of substitution
Iron Reduction
Mining
Scrap
Steel Production
Final aplication
Semi-finished
Finished
products
Source: Samarco
Iron Ore Market
2º Characteristic: Dependence on resource location
 Relevance of the seaborne market
Source: Samarco
Iron Ore Market – Past developments
Iron Ore consumption
 Crude steel production growth
 Push on seaborne demand
 Shift on market center
Source: Wood Mac, Samarco
Iron Ore Market – Recent developments
Iron Ore Prices
Iron Ore $/dmt
• Steel and iron ore prices
• Start of spot prices (India)
• Collapse of benchmark system
140
Iron Ore C$/dmtu
120
Price
Response
100
80
60
40
20
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Tex Report, Samarco
Iron Ore Market
2012 Volatility and Margins
Source: SBB, Samarco
Iron Ore Market Trends
New players over on pricing iron ore
Financial Market
(derivatives)
Trader`s
influence
on prices
Source: Platts, Samarco
Iron Ore Market Trends
New Supply and changes on ore`s characteristics
Prices moving downwards
Costs moving upwards
Source: CRU, Wood Mac, Samarco
Iron Ore Market Trends
Conclusion
The return of the current cycle?
Prices to
moderate over
medium term
New
pricing
systems
Higher
volatility
Lower
grades
Iron Ore
Market
Trends
Environmental
pressures
Higher
Production
costs
Higher
project
costs