Photo by: Bloomberg
JOHANNESBURG (miningweekly.com) – Chinese iron-ore imports were on the cusp of turning negative as China’s steel industry grappled with unsustainable margins, Liberum Mining said on Thursday.
Liberum Mining analyst Richard Knights, speaking on video, cited last week’s default by Sino Steel on a $315-million coupon payment as a potential catalyst for the rationalisation of the Chinese steel industry, where mills are losing at an estimated rate of $60/t of steel produced.
The upshot would be an iron-ore price plunge into the $30/t range next year.
On the supply side, an unabating 84-million tonnes of 2016 iron-ore production would collide head on with major demand side impediments, including 15 months of Chinese housing oversupply.
“It’s an industry that can’t keep going in its current guise and we expect lower demand going forward,” Knights outlined.