SÃO PAULO The commissioning of additional iron ore production capacity is expected to put pressure on iron ore prices in the second half of 2013, José Carlos Martins, executive director for iron ore and strategy at Brazilian miner Vale SA, said April 25.
"About 30 (million) to 40 million tonnes (of additional iron ore capacity, mainly in Australia) are expected to come on-stream in the second half (of the year), pressuring prices until demand absorbs this excess," he said during an earnings conference call with analysts.
While Martins didnt venture to forecast where iron ore prices would settle from August onward, he did day that they wont be below the $110-per-tonne mark.
"The (year-to-date) average iron ore price is $145 per tonne, so prices will be readjusted," he said.
In the first quarter, 34 percent of Rio de Janeiro-based Vales iron ore sales were based on the spot price after delivery, involving provisional pricing and an adjustment invoice following delivery, which also makes it more difficult to estimate prices for the coming months, Martins noted.
Meanwhile, Martins said he is optimistic about Chinas steel output figures, as well as pig iron and direct-reduced iron (DRI) production.
"In the first quarter, pig iron and DRI production increased by 4 percent, resulting in additional demand for 70 million tonnes of iron ore," he said.
Martins said he believes India will increase its iron ore output, although it will largely be consumed domestically. "India is not expected to influence global iron ore prices," he added.
A version of this article was first published by AMM sister publication Steel First.