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OPERATIONAL REVIEW
DIGGeRs & DeALeRs PReVIeW MACA.NET.AU

The global iron man

or last year’s Digger’s & Dealers pre- China accounted for 61% of last year’s 100 mega projects to be frontloaded in the
Fview edition, Paydirt took a deep dive global iron ore consumption, followed by first half of the year,” an OCE report this
into iron ore as the sector experienced India (7%), Japan (4%) and the EU (4%). year read.
significant tailwinds, with prices reaching Australia again stood tall as the world’s China’s infrastructure sector usually ac-
as high as $US230/t. largest exporter, contributing 53% of glob- counts for up to 25% of its steel consump-
Those prices soon dropped to as low al iron ore needs. tion and construction activity is to grow this
as $US85/t in November. Since then, the February this year saw iron ore a ma- quarter.
sector has somewhat rebounded with jor contributor to Western Australia’s $5.7 But China’s residential property sector
spot prices buoying to roughly $US130/t, billion FY2022 surplus. The mining sector accounts for up to 40% of its steel demand
but the turbulence seen over the last 12 contributed a cumulative $12.58 billion to and analysts have reported difficulties in
months has some obsevers uncertain for the State in that period with $10.3 billion in property developers meeting debt dead-
the future. royalties from iron ore exports alone. lines.
What comes next? While there was no Lehman Brothers The country’s top 100 developers saw a
In April, the Office of the Chief Econo- sequel with Evergrande, full confidence 40% decrease in new home sales in Janu-
mist (OCE) forecast iron ore prices for the has not returned to the iron market in a ary while new land sales in the top 50 cit-
remainder of this year to average $US110/t world where COVID-19 is still lingering. ies dropped 80%. Of course, the COVID
before falling to as low as $US80/t next The OCE maintains a weak outlook for pandemic cannot be ruled out as a signifi-
year. iron ore in the short-to-medium future with cant contributor to market contractions.
As is usual for the sector, the largest expectations for prices to decrease rough- COVID was pinned as the culprit for
catalyst stands to be Chinese demand. ly 15% per year and to potentially fall as a decrease in China’s factory activity in
The industry’s confidence in China to low as $US55/t by 2027. April, where productivity fell to lows similar
maintain its levels of iron ore consumption However, China is looking to stimulate to 2020 when the pandemic first began to
took a knock late last year with the coun- its markets and economy following a weak form.
try’s property and infrastructure industries 2021 which will have a positive effect on New COVID cases in China peaked at
facing contraction. Cornerstone was the iron ore demand. almost 30,000 per day in mid-April, a sev-
expectation of property giant Evergrande “China’s Central Government has an- en day average of 26,469.
to collapse under debt in Lehman Broth- nounced an emphasis on infrastructure The country has also imposed staunch
ers style. spending in 2022, with financing for over directives to curb new cases – reportedly

Greener battery materials.

Next generation thinking.

Discover more. ASX: NMT
Diggers & Dealers booth 88. neometals.com.au

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