Even after such a drop in the price of iron ore , the giants are still managing to make heaps of money, which can be expected to be lower this time the next year. These companies had been promised high returns to the investors stating low cost production and project postponement. The main theory associated with these companies are to fill the market with supply and squeeze out every last opponent against them in the market.
Many producers all around the world, including South Africa, Indonesia, Iran, and even smaller producers based in Australia have accepted their defeat. Even so the closure of these mines would not do anything to soak up the 132 million tonne iron ore, which is to be produced this year, and the 393 million tones of iron ore which is to flow into the market in the coming year.
Everyone around the world anticipated a closure of 132 million tones but as a matter of fact the number of closures is limited because most of the iron ore mines in China are state owned who give priority to employment, as much as they care about profit. Most of the investors are falling out of the sector, based on the realization that iron ore prices are declining steadily.
The Chinese steel production is at its peak now as the infrastructure and housing sector of china is a command down along with country’s economy, so the country is concentrating on exports rather than on the manufacturing and export sector.
Source: Shanghai Metal Market
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