MethodologyContact usSupportLogin
Oversupply in the iron ore market will continue to suppress prices through 2025, market participants told Fastmarkets in the week to Friday February 21, piling pressure on mining majors such as Vale and Rio Tinto, which were both affected by falling prices in 2024.
Brazilian iron ore mining major Vale’s earnings before interest, taxes, depreciation and amortization (EBITDA) for 2024 amounted to $15.4 billion, which was a 22% year-on-year decline and was primarily caused by lower iron ore prices, according to its latest performance report.
In the fourth quarter of last year, Vale’s EBITDA totalled $4.1 billion, which was a 40% year-on-year decline, based on a combination of lower iron ore prices and reduced sales volumes.
This aligns with Fastmarkets’ benchmark iron ore 62% Fe fines, cfr Qingdao index, which put the fourth quarter average last year at $103.40 per tonne, down from an average of $128.25 per tonne in the fourth quarter in 2023.
Vale’s iron ore sales in the 2024 fourth quarter reached 81.2 million tonnes – a year-on-year decline of 9.1 million tonnes.
Vale said that, based on market conditions, its high-silica products were predominantly being directed to the formation of blended products for concentration plants in China.
As a result, its premium in the fourth quarter was $1.0 per tonne, up by $2.9 per tonne from a discount of $1.9 per tonne in the third quarter.
A Shanghai-based trader confirmed to Fastmarkets that Vale had been blending more Brazilian Blended fines (BRBF) at Chinese ports – the preferred source for Chinese buyers (as opposed to procuring stock from the seaborne market).
Other than weak demand, the competitive pricing of other mid-grade low-alumina products such as IOC6 and Trafigura fines in the seaborne market has further suppressed the price premium for seaborne BRBF cargoes, sources said.
Fastmarkets’ index for iron ore 62% Fe low-alumina fines, cfr Qingdao, was 108.85 per tonne, while the index for iron ore 62% Fe fines, cfr Qingdao, was $109.26 per tonne, due to weaker demand for low-alumina Brazil fines.
Since late 2024, most steel mills have been turning to lower-grade low-alumina Brazilian fines because of the discount over the 62% Fe iron ore fines index, sources told Fastmarkets.
“The Special Fines Carajas fines [61.5%-61.8% Fe, alumina 1.8%], for example, has recently been sold with a discount around 9% over the 62% Fe iron ore fines index in the secondary market,” a Ningbo-based trader said.
Australian miner Rio Tinto report a 19% year-on-year decline in its underlying 2024 EBITDA to $16.2 billion, primarily due to lower realized prices and marginally lower shipments of iron ore, according to its latest annual report.
Rio Tinto’s Pilbara production was affected by depletion, predominantly at Paraburdoo as the company transitions to the Western Range and Yandicoogina, as well as higher-than-average rainfall.
But despite the decline in shipments of some premium iron ores from major miners in 2024, sources told Fastmarkets that limited steelmaking margins had led most Chinese steel mills prefer to use more cost-effective low- and mid-grade brands with a decent discount rather than mid-grade or high-grade fines with premiums.
Rio Tinto shipped about 97.8 million tonnes of Pilbara Blend fines in 2024, down by 7% on 2023, and the premium for PB fines in the primary and secondary markets in China eased from above $1 per tonne in November 2024 to less than $0.5 per tonne in the secondary market recently.
And so far in the first quarter of 2025, Rio Tinto shipments have been affected by adverse weather conditions.
Rio Tinto said that the total lost shipments due to cyclones so far in this quarter will be around 13 million tonnes, but nonetheless maintained its full-year guidance.
Market participants do, however, expect to see more shipments from Australia in the coming months, although some remain unconvinced that oversupply through the rest of the year will put pressure iron ore prices.
Supplies of both high-grade and low-grade iron ore fines are expected to increase, a second Shanghai-based trader said.
Rio Tinto said its Pilbara iron ore guidance remains subject to the timing of approvals for planned mining areas and heritage clearances, and said that lower-grade SP10 levels would remain elevated until replacement projects are delivered.
Additionally, more low-grade iron ore fines resources are expected to come to market this year, including Mineral Resources’ Onslow Iron project in West Pilbara in Western Australia and Fenix’s Shine iron project further south, which was brought back into production in the final quarter of 2024.
In terms of high-grade fines, Rio Tinto’s Simandou project in Guinea, West Africa, is on track to deliver first production in 2025 with an eventual annual capacity of 60 million tonnes.
“China’s weak steelmaking margins will continue to affect iron ore demand, and additional supply of iron ore is expected to weigh on iron ore prices,” a Singapore-based trader said.
Discover how our suite of steel prices can support your decisions while bringing transparency to the industry. Find out more.