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Iron-ore prices to remain strong as miners struggle to meet demand

By: Matthew Hill
Published on 24th July 2008
Updated 7 hours ago
Iron-ore miners of the world would not be able to meet demand for the steel-making ingredient for the next three to five years, JSE-listed Kumba Iron Ore (KIO) said on Thursday.

This was as Chinese demand for the product kept growing.

“Their appetite for iron-ore is going up on the back of steel demand, driven by domestic infrastructure investment. But it’s also a matter of domestic supply in China, where we see overall quantities for iron-ore going up, but the grades are declining,” KIO commercial head Timo Smit said.

China represents over 50% of the seaborne iron-ore market, he added.

“I think, for the next three to five years, supply is not going to be able to keep up with demand, and that should have a positive impact on prices,” Smit stated at KIO’s results presentation for the first half of 2008.

CEO Chris Griffith also said that the iron-ore market remained positive as demand growth continued to outstrip supply.

KIO was currently negotiating prices with its customers for the current year, which Griffith expected would come to a conclusion by the end of September.

The three biggest global producers had recently concluded their price agreements with customers, winning near 100% increases on 2007’s prices.