Iron ore oversupply to grow worse

Image: Christian Sprogoe/Rio Tinto

The current iron ore market glut will only get worse in coming years as larger operators increase volumes and more mines come online.

Earlier this week, Citigroup released data indicating that around 181 million extra tonnes of iron ore will dumped onto global markets in the coming years, weakening the value of a metal already seeing lowered demand.

Fears have been raised as Roy Hill ramps up to its full production levels, following exports earlier this year, S11D comes online in Brazil, and both Rio Tinto and BHP continue to expand their Pilbara iron ore operations.

According to Citigroup’s research, these operations could see Brazil boost shipments by 30 per cent to more than 430 million tonnes by 2020, while Australia is slated to lift exports by 12 per cent to close to 850 million tonnes.

These additional shipments are believed to lift the total surplus levels by 180 per cent within two years.

Earlier this month the iron ore price began to suffer a reversal of its 2016 first half rallies, slipping to a six week low of US$57.40 per tonne mark, more than a seven per cent drop from its height in August.

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