Xu Lejiang, president of Chinese steel producer Baosteel, stated last week that in the January-August period of the current year China's large and medium-size steelmakers registered an aggregate net loss of RMB 18 billion ($2.83 billion). Mr. Xu said that the shift in the domestic finished steel industry from short supply to oversupply is inevitable. In 2015, China will see the first decline in its crude steel output in over twenty years, and so China's steel industry and steel market participants should be prepared for a "winter" for the overall industry, Mr. Xu commented.
Meanwhile, the major global iron ore producers are continuing with their plans to reduce their iron ore production costs. Brazilian iron ore miner Vale has announced that its iron ore production costs, including mining operation costs and freight costs to Brazilian ports, will decline to $10/mt in the short term. In the third quarter this year, Vale's cash cost for iron ore fines FOB Brazilian ports, excluding royalties, declined to $12.70/mt, down from $15.80/mt in the second quarter.
According to iron ore price forecasts announced by research companies and banks, iron ore prices are predicted to decline to $45-55/mt CFR China in 2016. Under these circumstances, though some slight short-term increases may be seen in iron ore prices in the coming period, the current overall declining trend is expected to continue.