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Business Times
04-06-2025
- Business
- Business Times
Iron ore markets head for shake-up as Singapore-linked Simandou nears production
[SINGAPORE] Global iron ore trade is facing a pivotal shift as Simandou, a massive iron ore mine in Guinea being developed by a Singapore conglomerate, is about to ramp up supply of the ferrous mineral. Estimated at 2.4 billion tonnes of high-grade iron ore as one of the world's richest untapped deposits, and projected to start production by end-2025, Simandou is a strategic project for China as it aims to diversify its suppliers from Australia and Brazil – the two countries together accounting for about 80 per cent of seaborne iron ore exports. As a long-anticipated supply disruptor, the project is closely monitored by the iron ore industry, which is also betting on India to absorb demand lost in China, based on panel discussions during Singapore International Ferrous Week. Two blocks of the mining concession are being developed by Winning Consortium Simandou (WCS), a joint venture led by Singapore-based mine-to-shipping conglomerate Winning International Group. This is in partnership with China Shandong Weiqiao Group and state-owned China Baowu Steel Group. The remaining two blocks are under a Simfer joint venture, led by British-Australian mining giant Rio Tinto, in partnership with China's Chalco Iron Ore, and the Guinea government. At full capacity, the mine is projected to produce up to 120 million tonnes of high-grade iron ore (about 65 per cent iron content) annually. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Trade implications Cheong Jin Yu, head of Baltic Exchange Asia, told The Business Times that Baltic Exchange is keeping an eye on the development of Simandou as a key force to change trade routes of iron ore. 'What I would imagine would happen is that, if and when Simandou becomes a consistent supplier into the iron ore market, the (Baltic Exchange's) advisory council will tell us it's time to start pricing a route out of. So it will be a West Africa-to-China route,' he said. He added that once an index is established, the exchange would then develop different tools such as futures for the new index for market players to manage freight volatilities. The impact of Simandou's supply on key iron ore routes such as China-Australia hinges on actual cargo flows, Cheong said, with markets awaiting clarity. Vamsi Goutam, chief commercial officer of Tata Steel Minerals Canada, said during a panel that Simandou's supply could push up volumes and potentially freight rates in the Atlantic trades. He expects 'freight balancing' as shipping capacity might not pick up at the same rate as the steep increase in dry bulk volume. De-risking for iron ore producers The expected influx of high-grade iron ore from Simandou might worsen an oversupply situation as China's demand growth softens, which would put more pressure on iron ore producers. 'A lot of producers who are high on the cost curves will come under pressure,' said Claire Chong, senior analyst of Thurlestone Shipping, noting that their operational resilience will come into play. Francois Lavoie, senior vice-president of sales of technical market and product development at Champion Iron, said that as Simandou is 'mixing things up', small producers such as Champion Iron are trying to diversify offerings as part of their de-risk strategy. This includes converting production into iron ore of even higher grades and lower impurities, he noted. India's rising appetite Baltic Exchange's Cheong noted that the industry is also monitoring how iron ore imports to India would evolve, as the second-largest steel producer in the world ramps up its production. Paul Bartholomew, lead analyst of S&P Global Commodity Insights, noted that India is expected to emerge as a major iron ore importer, with the import forecast in 2026 to more than double from 2024's imports. However, Thurlestone Shipping's Chong noted that despite a rising projection, India's iron ore imports are still 'too small to compare with China's'. While India's iron ore import is expected to hit more than 130 million tonnes, China's iron ore imports are projected to stay above 1.1 billion tonnes to 2035, S&P Global indicated.
Business Times
04-06-2025
- Business
- Business Times
Iron ore markets brace for shake-up as Singapore-linked Simandou nears production
[SINGAPORE] Global iron ore trade is facing a pivotal shift as Simandou, a massive iron ore mine in Guinea being developed by a Singapore conglomerate, is about to ramp up supply of the ferrous mineral. Estimated at 2.4 billion tonnes of high-grade iron ore as one of the world's richest untapped deposits, and projected to start production by end-2025, Simandou is a strategic project for China as it aims to diversify its suppliers from Australia and Brazil – the two countries together accounting for about 80 per cent of seaborne iron ore exports. As a long-anticipated supply disruptor, the project is closely monitored by the iron ore industry, which is also betting on India to absorb demand lost in China, based on panel discussions during Singapore International Ferrous Week. Two blocks of the mining concession are being developed by Winning Consortium Simandou (WCS), a joint venture led by Singapore-based mine-to-shipping conglomerate Winning International Group. This is in partnership with China Shandong Weiqiao Group and state-owned China Baowu Steel Group. The remaining two blocks are under a Simfer joint venture, led by British-Australian mining giant Rio Tinto, in partnership with China's Chalco Iron Ore, and the Guinea government. At full capacity, the mine is projected to produce up to 120 million tonnes of high-grade iron ore (about 65 per cent iron content) annually. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Trade implications Cheong Jin Yu, head of Baltic Exchange Asia, told The Business Times that Baltic Exchange is keeping an eye on the development of Simandou as a key force to change trade routes of iron ore. 'What I would imagine would happen is that, if and when Simandou becomes a consistent supplier into the iron ore market, the (Baltic Exchange's) advisory council will tell us it's time to start pricing a route out of. So it will be a West Africa-to-China route,' he said. He added that once an index is established, the exchange would then develop different tools such as futures for the new index for market players to manage freight volatilities. The impact of Simandou's supply on key iron ore routes such as China-Australia hinges on actual cargo flows, Cheong said, with markets awaiting clarity. Vamsi Goutam, chief commercial officer of Tata Steel Minerals Canada, said during a panel that Simandou's supply could push up volumes and potentially freight rates in the Atlantic trades. He expects 'freight balancing' as shipping capacity might not pick up at the same rate as the steep increase in dry bulk volume. De-risking for iron ore producers The expected influx of high-grade iron ore from Simandou might worsen an oversupply situation as China's demand growth softens, which would put more pressure on iron ore producers. 'A lot of producers who are high on the cost curves will come under pressure,' said Claire Chong, senior analyst of Thurlestone Shipping, noting that their operational resilience will come into play. Francois Lavoie, senior vice-president of sales of technical market and product development at Champion Iron, said that as Simandou is 'mixing things up', small producers such as Champion Iron are trying to diversify offerings as part of their de-risk strategy. This includes converting production into iron ore of even higher grades and lower impurities, he noted. India's rising appetite Baltic Exchange's Cheong noted that the industry is also monitoring how iron ore imports to India would evolve, as the second-largest steel producer in the world ramps up its production. Paul Bartholomew, lead analyst of S&P Global Commodity Insights, noted that India is expected to emerge as a major iron ore importer, with the import forecast in 2026 to more than double from 2024's imports. However, Thurlestone Shipping's Chong noted that despite a rising projection, India's iron ore imports are still 'too small to compare with China's'. While India's iron ore import is expected to hit more than 130 million tonnes, China's iron ore imports are projected to stay above 1.1 billion tonnes to 2035, S&P Global indicated.
Business Times
01-06-2025
- Business
- Business Times
Asia's coal-reliant steel giants stall green transition: panellists
[SINGAPORE] Asia's steel giants are slowing the global green transition, as top producers China and India drag their feet on decarbonisation amid high costs and weak market demand – stalling progress in one of the world's top-emitting industries. During a panel discussion at Singapore International Ferrous Week last week, Claire Chong, senior analyst at shipbroker Thurlestone Shipping, said the steel industry's carbon-cutting efforts are being 'significantly delayed' largely due to the market's continued preference for cheap, low-grade iron ore over higher-grade alternatives essential for cleaner production. 'In the longer run, we are expected to move towards the higher grades. But right now, we are still not really seeing that demand very significantly… especially from China. I think their emphasis is still on cost-cutting,' she added. China, the world's dominant steel producer accounting for more than half of the global output, has been delaying its decarbonisation commitments. It continues to rely on coal-dependent blast furnaces and prefers cheap, low-grade iron ore over the high-grade variety essential for less carbon-intensive steelmaking. Jitendra Nanda, managing partner at Polish trading firm Balta, noted in a panel discussion that India, the world's second-largest steel producer, imported 5.1 million tonnes of metallurgical coke in 2024, up 35 per cent on the year. While the steel industry is responsible for 10 per cent of human carbon dioxide emissions, about 70 per cent of the global steel today is still produced by coal-fired blast furnaces, said Dr Lars Schernikau, shareholder of Germany-based commodity trading firm HMS Bergbau in his keynote speech last week. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Alongside this, tepid demand for premium-priced green steel in Asia and the steep capital outlay required to overhaul production methods are further dimming prospects of cleaning up one of the world's most carbon-intensive industries. Industry players told The Business Times that Chinese buyers, a critical market force, have become increasingly 'price-sensitive' and are willing to buy low-grade ore as long as the price is attractive. This has driven up the supply of low-grade iron ore, and further stalled the already sluggish green transition. Not fired up by other options too Shifting to high-grade iron ore to enable steelmaking with cleaner energy sources, such as hydrogen, is widely seen as a viable path forward. The industry could also reduce emissions by recycling steel scrap through electric arc furnaces and capturing carbon from coal-based blast furnaces. However, China still lacks a carbon market, and the creation of one will not be happening anytime soon, highlighted Rodrigo Echeverri, director of Carbon Research. Since there is no penalty for the emissions, low-grade ore will be around for a long while, he noted. Meanwhile, replacing coal-powered furnaces to facilitate scrap recycling remains a costly hurdle, with the high capital expenditure proving prohibitive for many mills. Zhang Xinzhi, trader at Sino Crown International, pointed out that with Chinese steelmakers projecting declining margins, they are not willing to 'invest in air' and, hence, are delaying high-cost efforts that could result in lower returns. Dilemma is bad news for green goals The same story is being told about India. Amita Khurana, group chief of raw material procurement at Tata Steel, noted that relying on coal is still 'the most economical and optimal' way to produce steel. 'Coking coal is here to stay in the foreseeable future,' she said, highlighting the importance of coal for India's energy security and the need for a balance between decarbonisation and industry survival. Other parts of Asia have also been dealing with challenges related to the green transition. Hiromasa Yamamoto, executive vice-president of Japanese trading firm Hanwa, highlighted that securing a sufficient amount of quality scrap for recycling is another impediment given the current production needs. Meanwhile, the demand for green steel is also insignificant in Asia as major steel buyers are unwilling to swallow the premium prices, which could be more than US$200 per tonne. Yamamoto noted that while demand for green steel is high in Europe, it is still soft in the East, including Japan. He added that no country in Asia, except for Singapore, can afford the premiums for green steel.
Yahoo
30-05-2025
- Business
- Yahoo
Iron ore pessimism subsides despite looming Simandou supply
By Amy Lv and Hongmei Li SINGAPORE (Reuters) -The prospects for iron ore prices are improving thanks to a lower than expected global surplus this year, analysts and traders say, though looming new supply from the giant Simandou project in Guinea remains a long-term downside risk for prices. Analysts and traders have cut their oversupply forecasts for this year to between 20 million and 30 million metric tons, from 50 million tons earlier this year, according to more than a dozen interviews at the flagship Singapore International Ferrous Week conference this week. That is because demand has been surprisingly resilient so far this year thanks to robust steel exports as buyers stocked up amid signs of an escalating global trade war, while cyclones disrupted supply in major producer Australia. In the first four months of 2025, China's iron ore imports slid 5.5% year-on-year while its crude steel output ticked up 0.4%, official data showed. Iron ore prices have held well above $90 per ton, below which high-cost miners struggle to break even, despite trade tensions between the world's top two economies that have fueled concerns about the outlook for steel demand. That has led analysts and traders to revise up their bearish-case pricing scenarios to between $80 and $85 per ton versus $75 or lower at the start of the year. Medium term demand for iron ore should remain firm because China's young fleet of blast furnaces will require iron ore for at least another decade, said analysts. "There won't be any big reduction in the number of blast furnaces in China by 2035 from the perspective of the life cycle of the currently running equipment, meaning that iron ore procurement will hover at a relatively high level," Long Hongming, a professor from Anhui University of Technology, told the conference on Tuesday. SIMANDOU Simandou, one of the world's largest high-grade iron ore mines, will start shipping ore in November, and its entry into the global market is expected to aggravate the supply glut starting 2026. However, the increasingly hostile attitude of Guinea's military government, which recently cancelled 129 minerals exploration permits and is locked in a standoff with Emirates Global Aluminium, raised concerns among traders, miners, analysts and steel mills at the conference in Singapore. Participants questioned whether the government's activist stance could affect how smoothly the project will be able to ramp up to its full production of 120 million tons a year. Simandou is a joint venture between Rio Tinto, the world's largest iron ore miner, and Chinese companies including China Baowu, the world's largest steelmaker by output. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
TimesLIVE
29-05-2025
- Business
- TimesLIVE
Green steel is distant and expensive, but teal steel is coming
By There is a conundrum in plans to decarbonise the steel sector. It's feasible with current technologies, but also unlikely because of the huge cost of deploying them. The steel chain, from iron ore mining to finished products, accounts for about 8% of global carbon emissions and reducing this impact is often viewed as vital to combating climate change. If there was consensus at the gathering of the iron ore and steel industry this week at Singapore International Ferrous Week, it's that cutting emissions from steelmaking is possible. But what was also obvious is that while miners and steelmakers are in the early stages of transitioning, the process will be slow and hugely expensive. The problem with this is nobody is sure who is going to pay. Australia's iron ore miners, who supply about two-thirds of China's imports, are capable of building a green iron supply chain, which would use solar and wind energy to create green hydrogen, which would then be used to beneficiate iron ore into direct reduced iron (DRI) and hot-briquetted iron (HBI). Using HBI cuts out about 80% of the emissions created in the steelmaking process by eliminating the practice of using coal to turn iron ore into pig, or crude, iron by removing oxygen and other impurities. But the iron ore miners won't invest the billions of dollars needed to build green iron plants unless China, which makes about half of the world's steel, and other major producers such as South Korea, Japan and India, commit to using the cleaner product. At the heart of the problem is cost. Using hydrogen to make green iron and an electric arc furnace to turn that into steel can reduce the emissions from about 1.8 tonnes of carbon to 200kg per tonne of steel. While estimates of the cost vary, the consensus is even a green steel supply chain built at scale would result in a near doubling of the cost of making a tonne of steel compared with the coal-intensive method of using a blast furnace and a basic oxygen furnace (BF-BOF). It's likely that steel mills will be unwilling to see their costs rise so dramatically, as it would be challenging to pass the higher prices fully on to consumers. The iron ore and steel market dynamics illustrate the scale of the challenge. Chinese steel mills are struggling for profitability and one way they try to cut costs is to increase the share of low-grade, and cheaper, iron ore in their production. This lowers the cost of the steel produced, but also raises the carbon intensity to about 2.2 tonnes per tonne of steel produced, up from about 1.8 tonnes if high-grade iron ore is used in the BF-BOF process. In other words, green steel ambition is likely to be sacrificed on the altar of economics. It is possible to lower the carbon intensity of steel by going somewhat greener. Using natural gas to reduce the iron ore instead of coal could trim the amount of carbon to about 1.1 tonnes per tonne of steel and if the gas can be secured at a cheap enough price this becomes a viable and economic option. Producing hydrogen using natural gas is often referred to as blue hydrogen and using this fuel to beneficiate the iron ore means steel could be considered teal, one of the shades between blue and green. Brazil's Vale is building what it calls mega-hubs in three Middle East countries with the aim of using cheap natural gas to produce DRI and HBI for export to steel mills in China. This product would also help steel producers comply with the EU's planned carbon border adjustment mechanism, which is slated to be introduced next year, though it may be delayed. There are several points to note, first that while the 80-million tonnes of iron ore a year that Vale is believed to be planning on processing in the Middle East sounds substantial, it's not even one month's worth of imports by China, which buys about three-quarters of global seaborne iron ore. Natural gas isn't a viable option for Australia's iron ore sector, as it is too expensive and the available supply in Western Australia, home to most iron ore mines, is already spoken for by the domestic sector and the liquefied natural gas producers. This means teal steel will make a bit of a difference but not the step-change needed to decarbonise steel. That will require government legislation and regulation to incentivise or punish steelmakers through measures such as subsidies or carbon taxes to the point where green steel becomes viable. Teal steel is an example of the cliché to not let perfect be the enemy of good.
