Although output will continue to expand, iron ore prices are easing from previous highs
Los Angeles, CA (PRWEB) September 01, 2012
After two years of extraordinary growth in 2010 and 2011, the revenue generated by the Global Iron Ore Mining industry is expected to contract 5.9% in 2012. Although output will continue to expand, prices are easing from the high levels recorded in the previous year. The gains made in 2010 and 2011 followed a period of gloom during the global recession. Following the recession, most iron ore supply contracts shifted from annual pricing (which has been the norm since the 1960s) to more flexible quarterly or even monthly pricing. Higher iron ore output and prices over the five years through 2012 are expected to yield 23.5% average annual growth in industry revenue. The industry is expected to generate $248.2 billion in revenue in 2012, compared to $86.5 billion in 2007. “Strong growth in large emerging nations, such as China and India, has driven the demand for iron ore and underpinned higher prices,” says IBISWorld industry analyst Nima Samadi. “As a result, industry revenue and profit have expanded rapidly.”
Total iron ore production worldwide is expected to reach 2.85 billion metric tons in 2012 (compared with 2.04 billion metric tons in 2007). More than half of this total will be traded internationally. “Trade occurs primarily between regions rather than within regions, although there is some intraregional trade in Europe and North America,” says Samadi. “The major importing regions are North Asia and Europe, while the major exporting regions are South America and Oceania.” Global Iron Ore Mining industry market share concentration is moderate. The industry’s largest players are heavily focused on internationally trading in iron ore. Industry concentration has increased as the largest firms in the industry, Vale, BHP Billiton and Rio Tinto, have acquired smaller players. BHP Billiton's decision to abandon its plans to merge with Rio Tinto announced in late 2007 will keep industry concentration at its current level. Had that merger proceeded, industry concentration would have increased further.
Despite contraction in 2012, industry performance is expected to continue improving over the five years through 2017. The gain reflects ongoing global economic growth, increased steel output and rising iron ore production and prices. Profit is expected to grow slightly slower than revenue, reflecting rising wages and higher material costs (especially of fuel). For more information, visit IBISWorld’s Global Iron Ore Mining industry report page.
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IBISWorld industry Report Key Topics
This industry consists of firms that mine iron-bearing ores (primarily hematite, magnetite and taconite). In addition to ore extraction, mining includes the development of mine sites and the processing of ore mined into a concentrate or pellet form. The iron ore and iron ore pellets are then sold as an input to blast furnace steel production.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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