Speaking at the "New Horizons in Global Steel Markets" 9th SteelOrbis Annual Conference held in Istanbul on November 28, Christopher Plummer, managing director of Metal Strategies, predicted that iron ore prices, which have recently been declining sharply, will fall to $65/mt next year, while they are expected to drop below $60/mt temporarily in 2020.
Mr. Plummer commented that the sharp and largely sustainable raw material price declines in the last three years, including a major, and further, step-down in 2014, are welcome news for the steel industry. However, these declines thus far have benefitted integrated steelmakers without captive raw materials to a far greater degree than electric arc furnace (EAF)-based steelmakers.
According to the Metal Strategies managing director, despite the present significant competitive disadvantage, the electric arc furnaces are expected to increase their capacities over the next 10 years and beyond. He also touched upon the prospects regarding alternative iron production, indicating that direct reduced iron (DRI) production will more than double by 2030 which is a good thing for EAF-based producers in Turkey, releasing the price pressure in the scrap market. He also mentioned the possibility of Italy building two DRI plants, one in Algeria and the other in Piombino, at the site of the former Lucchini plant.
Mr. Plummer pointed out that Turkey is currently 45-50 percent self-sufficient in scrap supply, with this figure expected to rise to 60-65 percent next year, adding that the country's scrap costs will decline because of lower freight rates. In 2013, Turkey was the world's largest scrap importer with 19.7 million mt, he remarked.