Iron Ore - The Markets, the Metallurgy, the Uses and Excuses
Our Senior Mining Analyst, Alex Sutton, discusses the uses and the current market of Iron Ore.
What do you think when you think of Iron Ore? Australia’s major export? Dusty mines in the desert
Pardon the pun but this month we’re going to dig a little deeper into Iron Ore, the market’s that it’s sold in and its uses.
Yes, mining can be a dirty business but in Australia’s Pilbara region we have some of the most spectacular Iron Ore deposits in the world. They are a marvel of Australian mining engineering and something to be proud of. These deposits are pretty much as old as the continent of Australia itself with most of the Hematite deposits being a whopping 2.2 to 2.3 billion years old yet the mines themselves being in operation for some 50 or so years with the worlds major iron ore producers, Rio Tinto, BHP and Fortescue Metals staking ground across the landscape.
Iron Ore is the primary ingredient in steelmaking, and Australia’s Iron Ore is primarily shipped to China, Japan and Korea where it is sent through the blast furnaces and pops out on the other side as steel.
So what did you do today?
For most readers you may have woken up in a house that uses steel in its framework, I’ll bet that last night you used stainless steel utensils to consume your dinner and for your breakfast this morning. Did you drive or catch the bus to work? The answer to this doesn’t matter, your car is primarily made of steel and so is the bus you rode to work on. If you walk along the Sydney Harbour Bridge and look at the steel framing on the eastern side you will find BHP insignia on the steel framing, it’s a little piece of the Pilbara in the heart of the city, the point is that everyone uses steel every single day.
The main markets for iron ore are the 58% Fe market, the 62% Fe and 65% Fe. All of these markets are split into lump and fines…just think of these as little rocks and big rocks. The three big Iron Ore producers sell on all of these markets, with Fortescue Metals primarily selling on the 58% Market as well as Rio Tinto selling its Robe Valley and Yandicoogina Pisolite Ores on this market as well.
The beautiful thing about the pisolite ores is that their impurities are just water caught in the mineral structure so when they’re heated in the furnace the steelmakers produce sinter which has an iron grade of 62% and this can be easily made into the world favourite alloy. The 62% market is the producers favourite with Rio and BHP primarily selling on this market and finally the 65% market selling at a premium which is where most of the magnetite concentrates are sold here.
Iron Ore has been on a massive upward run recently however heat has come out of the market in recent months as the worlds largest consumer curbing steel production in anticipation of the Beijing Winter Olympics and the need for clear skies. However, following the Olympics in 2022, it is tricky to predict with some analysts saying steel production to return to the levels seen in the early parts of 2021.
Where to from here?
Trading equities is all about having access to the right investment opportunities and making decisions based on accurate, unbiased information. Often, this means hours of research on a daily basis, keeping up with several ASX announcements, understanding economy-impacting events and regularly consuming broader news updates. If you're not an equities trader by profession, then it can quickly become rather overwhelming, especially once you have built a considerable-sized investment portfolio.
Our Equities Trading team, backed by our independent research department is the ideal solution for said situation. Our clients receive access to exclusive investment opportunities, daily ASX research reports, our expert weekly outlook on the Australian markets and direct access to our equity traders.
Trading with Barclay Pearce Capital is about building long-term returns, trust, confidence and a mutually beneficial relationship.
Trading with Barclay Pearce Capital ensures the needs of investors of all magnitudes are met by our highly skilled and attentive trading professionals.
~ Trent Primmer, Director of Trading, Barclay Pearce Capital.