As you know, iron ore is the main material in the steel production chain. Different forms of iron ore are used in the production of steel, and in fact 98% of the iron ore mined in the world is used to produce steel.
In the automotive and construction industries, it is the major consumer of steel. Therefore, the demand for steel in these industries is affected by the demand and price of iron ore.
Iron ore production stage
The blast furnace needs 1.75 tons of iron ore, 750 kg of coal and finally 250 kg of iron ore to produce one ton of iron and consumes about 4.5 tons of air.
The air temperature in the center of the steel furnace reaches 1600 degrees Celsius. There are different methods for the production process, one of which is the blast furnace.
A substitute for iron ore
In fact, there is no substitute for iron ore, but there are substitutes for its main consumer, steel. Among other things, it has strong competition with other metals such as aluminum, which are increasingly used in industries such as automobiles. In addition, plastic and glass are replacing steel in the production of containers.
From another point of view, it can be said that metals such as aluminum require a large part of the electricity used in production, so the use of steel is more common.
Again, a limited amount of iron scrap was recovered, but steel was recovered more than any other metal. Although steel is also produced from scrap recycling, it is currently insufficient in total.
Iron ore production
In 2009, world iron ore production reached 1.0691 billion 150 million tons, which is a decrease of 2.3% compared to 2008. Production declines in the United States and Europe have already occurred, with iron ore output in the United States down 28.2 percent and Europe down 11 percent. , 4 percent
Major producers of iron ore
It can be said that it is the most important source of iron ore in Australia. Then China and Brazil became second in iron ore production. Other iron ore producers include Russia and the United States.
In 2009, Australia’s total iron ore production was about 393 million tonnes and 0.9 million tonnes. After that, China was the second largest producer with 340 million tons and 900 thousand tons.
However, the difference between Australia and China is that Australia’s product is exported, while China consumes all of its own product. Because it is the largest steel producer in the world and has one of the largest iron ore consumption markets.
Import and export of iron ore
Currently, it can be said that China is the largest steel producer in the world. About 44% of the world’s production is done in this country. In addition, China produces and imports iron ore to meet its own needs. China is the second producer of iron ore in the world and the largest importer of iron ore.
In 2010, China’s total imports were 619 million tons, a decrease of 1.5% compared to 2009.
China is the largest consumer of iron ore in the world with a demand of 800 million tons. Most of China’s demand is supplied by Australia and Brazil, while India imports only 25% of China’s.
Iron ore consumption
As you know, China is the largest consumer of iron ore in the world’s steel industry. In fact, about 98% of the world’s iron ore production is used by this country.
Therefore, it can be said that steel production determines the demand for iron ore. Therefore, steel production shows the demand for iron ore. In steel production costs, it can be said that iron ore and coal constitute 75% of the costs.
Currently, Asia is still the largest producer of steel, and China and India are the largest producers of steel in Asia. In these countries, the amount of infrastructure activity is high, so the price of steel in these countries is higher than in other countries.
Because these two countries have a lot of infrastructure activity and their need for steel is more. Although countries like India have relatively high economic growth, the path of economic growth must be changed so that this upward trend continues for a long time, so that the demand for industries such as automobile manufacturing is stronger.
In the past, iron ore prices were negotiated by major mining companies and steel producers, and the agreed price was an indicator of the price of the entire world steel industry, but recently this mechanism has been priced annually with systematic short-term data. And globally. The big three mining companies no longer have annual contracts.
Many mining companies in Australia and Brazil have switched to short-term contracts. In India, where prices are mainly cash, some large suppliers have shown a willingness to use the Metal Bulletin Price Index or Platts.
Iron ore price fluctuations
Iron ore prices have risen since January 2009, when the steel price index for 62% pure iron ore rose from $70 per dry ton CFR China to $190. As demand increases, supply decreases as a contributing factor to this upward trend.
Since the price of iron ore is determined based on the international price index in US dollars, changes in the US dollar rate will also affect the price of iron ore.
If the Indian rupee appreciates against the US dollar, the price of iron ore will depreciate in rupees, and vice versa, if the rupee depreciates, the price of iron ore will increase in rupees.
The future prospects of iron ore
China imported 58 million tons and 80 thousand tons of iron ore in December, which is the highest amount in the last 9 months. On the other hand, Karnataka has banned the export of Indian iron ore, 23 illegal mines in Odisha have stopped operations and rising transportation costs have increased costs.
Overall, iron ore prices are expected to rise as there are positive signs on the supply and demand front. On the supply side, weather factors and demand areas also affect China.
Of course, there are also risks associated with rising prices. If the increase in the price of steel products reduces the demand, it will also affect the price of iron ore.
iron used in the production of steel
Iron is one of the most common elements on earth, used in the production of steel and steel by-products. Almost all handmade structures contain at least some iron.
In general, iron is one of the oldest metals that was first used in decorative objects at least 3500 years ago. Pure iron is a soft gray metal. Although iron is a common element, pure iron is almost never found in nature.
