ROSY FUTURE AHEAD FOR IRON ORE PRODUCERS

Iron producing (in all its forms) is expected to rise from 934 million tonnes in 2006 to 1224 million tonnes in 2011 - an increase of 31 percent. This is good news for iron ore mining companies. Demand for iron ore is forecast to increase at a faster rate than that of steel. Scrap availability is likely to remain tight into the future.

We forecast only modest change in the proportion of global steel manufactured by the two main processes - blastfurnace/oxygen and electric steel making over the next five years. The former is expected to retain its dominant position with just over two thirds of the output. The latter will provide most of the remaining third. Open hearth melting will decline further.

In the five years from 2006 to 2011 we forecast worldwide oxygen steel manufacturing rising by almost 250 million tonnes (31 percent). Over the same time span, we predict that electric steel making will expand by almost 110 million tonnes (27 percent). Output by other methods is expected to decrease by one third.

In the industrialised nations, the proportion of production from the oxygen convertor route is likely to slip slightly over the next five years and replaced by electric melting. Large tonnage gains are expected in the former USSR for the integrated process but the percentage improvement will be minimal. Electric melting will replace open hearth supply.

Substantial growth in total steel output in South America will occur in the period to 2011. However, the oxygen steelmaking process will show an increased share as new capacity is built in Brazil. In contrast, the integrated blastfurnace/oxygen route will command only a small share of the rapidly rising expansion of steel making in the Africa/Middle East. The preferred process will be electric melting using DRI units as the input material.

Over the next five years, the oxygen steelmaking process will continue to dominate in China and Japan. However, in the rest of Asia we predict that the substantial growth in output to 2011 will be shared equally between the two main processes.

Source: Global Iron & Steel Production to 2011  - A new report from MEPS (International) Ltd.