In May this year, platts 62% iron ore index once breached the $230 / ton level. Since July 15, iron ore prices in the international market have fallen significantly, a total drop of 41%, to $129.6 / dry ton on September 9. However, recent news from the market could lead to a renewed upward trend in iron ore prices next year.
Brazil's Vale sa, the world's largest iron ore producer, said on Sept 10 that it could produce only 370 million tonnes of iron ore in 2022, down 30 million tonnes from its original target of 400 million tonnes.
A production cut by Vale, the world's largest iron ore giant, could affect global iron ore supplies in 2022, pushing up prices.
Vale said the reduction was mainly due to an expected reduction in iron ore production in northern Brazil from 230m tonnes to 205m tonnes. The company's iron ore project approval in Brazil's Northridge region had problems, resulting in the failure to start work on time, which had a great impact on its overall iron ore production capacity. Vale, the world's largest producer of iron ore, is said to have an important position in the global iron ore supply chain. Now its capacity is falling, more likely to affect the global iron ore supply and demand next year.
So, as the world's other major exporter of iron ore, Australia next year's expected capacity of iron ore?
BHP's iron ore capacity is expected to be in the 249-259 million metric tons range in fiscal 2022 (July 1, 2021 to June 30), similar to the previous fiscal year, according to the company's July forecast. As such, supply in the global iron ore market may tighten next year because of Vale's iron ore capacity.
Relevant forecast data shows: the future of iron ore prices overall will maintain a downward trend. BHP billiton has also said it is hard for iron ore prices to rise in the future because of declining demand from major buyers.
Analysts at Credit Suisse echoed that view and raised their 2022 average iron ore price forecast to $144 per kiloton, up 20% from their previous estimate. However, Credit Suisse still sees iron ore prices generally remaining on a downward trend in the future, and could even fall as low as $80 / dry ton in 2024.
