Iron ore production on the decline but trade still rising, UN report finds

Iron ore production fell last year for the first time in seven years but continuing demand for the raw material from the Chinese steel industry ensured that the volume of trade increased again, a United Nations report released today says.

Global production dropped by 6.2 per cent to 1.588 billion tons, according to the report published by the UN Conference on Trade and Development (UNCTAD) in cooperation with the Sweden-based Raw Materials Group.

But growing demand for iron ore in China, coupled with a fall in that country’s domestic production because of some mine closures, meant that international trade reached a record level of 955 million tons last year, a rise of 7.4 per cent.

China is now by far the largest importer of iron ore, accounting for two thirds of global imports, and the world’s most populous nation is expected to exert an increasing influence on prices.

Today’s report predicts that iron ore prices are likely to increase because the major producers are consolidating and the consumers are fragmented, leading to a sellers’ market. But the outlook for prices remains uncertain, the report noted.

Australia is now the largest producer of iron ore in the world, with 394 million tons produced in 2009, followed by Brazil (300 million tons), India (257 million tons) and China (234 million tons).