The largest mining companies oversaturate the iron ore market

Record results in iron ore mining were achieved by BHP Billiton (Australia) and other giants of the global mining sector. Such a policy of companies is not amenable to logic, given the lack of proper demand among steel manufacturers. It seems that the fall in the price caused by excess of offers is no longer around the corner.

However, heavy sector cars are digging more for less money in order to tighten the stray and survive small competitors or prevent the development of new projects. BHP Billiton, Vale, Rio Tinto and Fortescue Metals Group with their iron mines in Australia and Brazil control the market. At the same time, analysts warn that the slowdown in production activity in China will lead to a weak general demand for ore. But Rio Tinto and BHP are among the most effective iron ore producers in the world. At current prices, about $ 130 per ton, each has a margin of about $ 80 per ton.

Andrew Mackenzie, the new General Director of BHP, does not show any signs of a change in tactics. In the same way, Mr. Kloppers in 2010 almost alone broke half -century old annual prices for iron ore in order to draw out weak manufacturers. Rio Tinto is going to raise its production of iron ore by 35 percent to 360 million tons in 2015.

Vale, the largest iron ore mining miner in the world, this month achieved the approval of the Brazilian environmental protection committee to expand the expansion of his iron -boring mine Carajas, one of the richest and most productive.

Fortescue Metals Group expands its mines in Australia to increase production by 60 million tons per year. Such commitment to quick extensions shows that global miners see risks for restoring balance. Spot prices for iron ore in a week rose to a 2-month maximum, relying on replenishment of reserves by Chinese steel factories, although the rate of replenishment of reserves may slow down, in this case it is assumed that a two-week rally may end soon.