COLUMN-Big iron ore miners’ plan to displace everybody else losing steam – by Clyde Russell (Reuters U.S. – June 3, 2015)

http://www.reuters.com/

LAUNCESTON, Australia, June 3 (Reuters) – How well is the plan by big iron ore miners to displace high-cost iron ore from the seaborne and Chinese domestic markets going? Maybe just OK, certainly not great.

Much has been written about how the big three global iron ore miners will use their low-cost, high-output mines to muscle competitors out of the market, thus restoring the supply-demand balance and ultimately justifying the billions of dollars they spent boosting capacity well in excess of demand.

The problem for Brazil’s Vale and the Anglo-Australian pair of Rio Tinto and BHP Billiton <BHP Billiton> is that the signs are this isn’t working perhaps as well as they may have hoped.

Certainly Chinese trade numbers show that Australia in particular has increased market share in iron ore imports, but the momentum may be stalling.

In the first four months of the year, Chinese imports of the steel-making ingredient from Australia were 195.845 million tonnes, or 63.7 percent of the total 307.282 million tonnes.

This is up from the 58.7 percent share of imports held by Australia for the whole of 2014, but it appears the pace of growth in market share is slowing.

The news is worse for Brazil, which has actually been surrendering market share.

In the first four months of 2014, imports from Brazil were 57.54 million tonnes, or 18.3 percent of the total.

This is down from the 18.7 percent market share held in 2014, 18.9 in 2013 and 22 percent in 2012.

While volumes have obviously increased as Chinese imports have grown from 745 million tonnes in 2012 to 932.7 million last year, it appears Vale has been struggling to keep up with its Australian competitors.

It’s possible to make the argument that Rio Tinto and BHP Billiton, along with world number four producer Fortescue Metals Group, have achieved what they said they would.

For the rest of this column, click here: http://www.reuters.com/article/2015/06/03/column-russell-ironore-australia-idUSL3N0YP1C320150603

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