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TAKEAWAY
The iron ore and pellet market is dominated by four major players with Vale leading the pack with revenues of nearly $29.3 billion in 2019. While Rio Tinto and BHP Billiton are behind with iron ore revenues of $24.1 billion and $17.3, respectively, Cleveland-Cliffs (CLF) is the smallest player with a revenue base of $2 billion in 2019.However, CLF provides the best quality of output in the industry, with all of its production made up of pellet, which command better pricing in the market.Additionally, CLF's new hot-briquetted iron (HBI) plant at Toledo is set to become functional at the end of 2020, contributing an additional 1.9 million tons to its output. The output from the new plant can also be used in electric arc furnaces (EAF) compared to only blast furnace currently, which would help CLF gain more customers in the near future, thus leading to higher shipments.
In this dashboard, Trefis analyzes the changes in the Iron Ore & Pellet revenues of the 4 largest players over the last few years.
Though iron ore & pellet market size is expected to remain stagnant at the current level in 2025, Cleveland-Cliffs' market share is likely to see a growth of ~60%, from 2.7% in 2019 to 4.3% by 2025, primarily due to higher volume and premium pellet pricing
Total Iron Ore & Pellet Market
CLF's Market Share
The top players in the iron ore and pellet space generated around $72.6 billion in revenues over 2019, posting a y-o-y growth of about 15.5%. Market size has continuously increased due to higher output and pricing. However, the market size is expected to remain almost at the current level in 2025, as sharp drop in pricing and lower demand from China is to lead to significant drop in revenue in 2020, with the recovery expected to be slow
Total Iron Ore & Pellet Market
Iron Ore Market Growth
Below we explore the volume, price, and revenue forecast for major iron ore companies
a) Volume
• Though all companies are expected to see higher volume in 2025 compared to 2019, the growth in CLF's volume sales is likely to be the highest.
• The major dam accident at Vale's site in Brazil led to drop in output in 2019, with recovery being slow. Demand for RIO's and BHP's loerw grade output is to be low from China due to its environmental policy.
• CLF's superior pellet output is expected to have higher demand. Additionally, its new hot-briquetted iron (HBI) plant, which will become fully operational by end of 2020, is likely to add 1.9 million tons to its total output.
• Acquisition of AK Steel has helped it secure >25% of its shipments
• CLF's foray into electric arc furnaces (EAF), as against only the blast furnace currently, is also expected to lead to higher demand for its product along with additional customer reach
Vale's Iron Ore & Pellet Shipments
RIO's Iron Ore & Pellet Shipments
BHP's Iron Ore & Pellet Shipments
CLF's Pellet Shipments
b) Prices
• Price realization is expected to decrease in the near term from 2019 due to lower demand from China with many steel firms shedding capacity.
• However, as economic growth picks up, leading to higher demand, prices are expected to go up.
• Environmental and cost concerns are expected to lead to higher demand for higher grade ores or pellet.
• Thus, CLF's output is likely to continue to command the highest price for its product, with it rising from $103/ton in 2019 to $125/ton in 2025
Vale Realized Price Per Ton
Rio Tinto Realized Price Per Ton
BHP Realized Price Per Ton
CLF Realized Price Per Ton
CLF's market share in the iron ore & pellet market is expected to rise continuously from 2020 to reach 4.3%, which marks a growth of almost 60% from 2.7% market share in 2019
CLF's Market Share
This compared with-
• Vale's Market share growth from 40.3% in 2019 to 43.7% in 2025;
• Rio Tinto's market share ecline from 33.2% in 2019 to 28.8% in 2025; and
• BHP Billiton's market share decline from 23.8% in 2019 to 23.1% in 2025
Related Analysis
Our Complete Set Of Analyses For:
Cleveland-CliffsValeRio Tinto