glut threatens china's miners

Global iron ore glut threatens China's miners

Thursday, 08 May, 2014

Mainland iron ore miners face a rising challenge from increased overseas supplies of raw material for steel and some higher-cost capacity will probably be forced to close, according to BHP Billiton.

The gain in global production is being led by Australia and Brazil and their new, low-cost output will displace marginal suppliers in China, Michiel Hovers, vice-president of iron ore marketing at BHP, said at an industry conference yesterday.

"Seaborne supply growth will come largely from Australia and Brazil," Hovers said. "This new supply will be low-cost seaborne and displace marginal supply from high-cost domestic Chinese producers and other lower-quality iron ore imports into China."

If prices drop to US$100, supplies in China may be hurt as mainland mines with high production costs are forced to cut output or close, according to Australia's Bureau of Resources and Energy Economics.