Simandou offsets iron-ore supply cuts elsewhere, Macquarie says
The ramp up at Guinea’s massive Simandou iron-ore project has offset supply declines elsewhere as lower prices, high freight rates and diesel costs squeeze producers, according to Macquarie Group.
“Simandou has single-handedly supported seaborne volumes,” the bank said in a note by analysts including Florence Sun. If October shipment volumes are sustained, full-year exports could be about 28 million tons, weather permitting, they said.
Iron-ore prices have retreated about 24% from a peak in May, as rising supply coincided with lackluster demand, dipping below $90 a ton last month. As much as 170-million tons of production becomes loss-making below that level, UBS Group AG said in a note last week. Macquarie estimated overall supply of the steelmaking ingredient will grow by about 14 million tons in 2026, while Chinese output will drop by 4.5%.
Two of Simandou’s mine blocks are owned by the China and Singapore-led Baowu Winning Consortium Simandou, while the other two are owned by Simfer, a joint venture between Rio Tinto Group and Chinalco
Guinea exported 8.9-million tons of iron-ore in the third quarter, up from six-million tons in the previous three months, according to government data. Baowu-Winning accounted for 6.55-million tons, while Simfer shipped 2.16 million tons.