“We have been long-term bearish iron ore,” Morse said in Singapore. “It’s a combination of unbelievably cheap, new raw material from Australia and Brazil, and a dampening of demand at the same time.”
Benchmark prices will end this year at the mid-$90s a tonne, before falling to $75 at the end of 2020, he said. Five years out, they are seen at $55 a tonne -- a level that’s still well above current costs of production at the largest miners. Spot ore was last at $94.10 a tonne, up 30% in 2019, according to Mysteel Global.
At present, China dominates the global steel industry, even as output in India has been expanding at a rapid clip. In July, mainland mills pumped out 85.2 million tonnes of crude steel, or 54% of the worldwide total. Second-placed India made 9.2 million tonnes, or 5.9%. Brazil placed ninth, making 2.4 million.
BHP Group, the world’s largest miner, said last month its base case is that Chinese steel production “has entered a plateau phase, with the literal peak to occur no later than the middle of next decade.”