How a changing steel market is forcing iron ore supply to adapt | Wood Mackenzie
How will demand for green steel change the supply outlook?The long-term transition towards green steel puts suppliers of
high-grade, low-impurity ores in pole position.This structural shift is already impacting capital investment decisions, with developers showing a clear preference for high-grade iron ore resources. Brazil looks well positioned, while Guinea’s giant Simandou project is set to become the most significant addition of high-grade iron ore supply in recent history, notable both for its planned production capacity (up to 180 Mtpa) and quality (high-grade 65% Fe fines iron ore with combined silica and alumina lower than 4%).The transition towards green steel poses a challenge for producers of lower-grade ores, notably Australia. We forecast Australia’s iron ore exports, currently around 60% of the global total, peak in the next two years before entering gradual long-term decline. Australian miners are responding to the changing market by investing in technology to make their iron ore
suitable for direct reduced iron (DRI) processes and decarbonising existing production.
What does this mean for prices?In the changing outlook for iron ore, the quality differential will be the key to future pricing. We expect rising demand for high-quality lump and pellets and supply constraints will drive a growing premium for these products over the long term. Meanwhile, prices for low-grade ore delivered to China will fall by around a third by the early 2030s as Chinese demand softens.Our forecasts for high-grade pellet prices to rise by over 20% through the same period are an indication of how the push for green steel is disrupting the market"
MGT is in the right position. We are primed to capitalize in this new trend.
