Iran is one of the major iron ore producers in the world and is estimated to have produced 32.59 mnt iron ore concentrate in Iranian FY17. The country is also leading exporters of iron ore and has exported around 21.10 mnt iron ore in the same time span. Following are the excerpts from Steel360 interview with Mr Keyvan Jafari Tehrani, CEO of Jame Tejarat Co. (JTC) and IROPEX (Iron Ore Producers & Exporters Association of Iran).
Q. Iron ore prices have fallen below USD 60/mt amid high stockpiles in China while shipments into the country continue. How has this affected Iranian iron ore exporters, particularly those shipping to China?
The price drop has pushed all Iranian iron ore miners’ mainly private sectors to the corner. Still iron ore movement is happening from Iran but most of the cargoes are iron ore concentrate (in addition to a few shipments of iron ore fines or lumps) from government mines. They have to sell as per the market price and have no option. Eventhough when market was much lower than today they were selling iron ore concentrate at USD 30/MT level as FOB Bandar Abbas. Their cargoes (governmental concentrate shipments) are selling between USD 45-46/MT FOB Bandar Abbas now, and still it’s good some buyers are there.
Q. What happened with the Iranian mines that have reopened after the price rally this year?
Are they now looking at closing again? At the moment, the most critical problem for Iranian iron ore miners mainly private sectors which kill the business isn’t low market situation in China only, but it’s a regular export of iron ore of medium and low grades from India which started after 6 years ban imposed on Sept’16. High export of iron ore from India is giving hard competition for Iranian iron ore miners mainly who own hematite iron ore mines (the most of Iranian private sectors are hematite origin). Regretfully, most of the re-opened iron ore mines shut down again and number of operative and active iron ore mines including state or government sectors is less than 20 units only.
Q. Is there a lot of iron ore stuck at Iran’s ports because exporters are waiting for prices to rebound?
Yes, it is both in the load ports as well as in the mines, but in the ports are more. This is valid for both private and government mines. Most of the Iranian miners shipped their cargoes to the load ports when market was so good in the end Feb/early Mar’17 and never ever expect market may drop by more than USD 35.
Q. How low do you see iron ore prices falling to? And what would support a recovery?
It’s not simple to do market prediction. But I believe still there is room for more price reduction to some level of USD 55/mt, and even lower unfortunately. When the support line of USD 60/MT level was broken, then nothing can stop it except reducing this big quantity of iron ore stockpiles in China ports which passed over 140 mnt now. The best figure for this iron ore port reserves which supply by seaborne shipments is something around 100 to 110 mnt, and when this resistance line of 110 mnt was broken, and it’s increasing in daily basis and right now even touched over 140 mnt, no more control can be there on price. The price can rebound as soon as Chinese steel mills consume more from seaborne cargoes than domestic concentrate to reduce this big reserve of iron ore in ports, which is pushing hard on iron ore prices.