Industry overview

2007 world steel consumption by geography World steel consumption in tonnes

Steel is the most widely used of all metals, with world crude steel production increasing by 7.5% in 2007 to reach a total of 1.34 billion tonnes.

The seaborne iron ore market, which is a critical component of the global steel industry, has grown from 454 Mtpa in 2000 to 782 Mtpa at the end of 2007. This increase has arisen mainly from Chinese demand growth. China is expected to continue being the main driver of global steel production growth and is forecast to increase production from 489 Mtpa in 2007 to 750 Mtpa by 2012. This level of production will require iron ore imports in excess of 730 Mtpa. Growth in steel production in the short to medium term will occur in former Soviet Union countries, supported by steady growth rates in the rest of Asia and Europe. Further support for iron ore demand will come from steel prices which have stabilised at historically high levels.

The global market for iron ore is expected to remain tight in the short to medium term, with major suppliers experiencing difficulties in bringing on new production in time to meet increasing demand, owing, inter alia, to the global shortage in engineering and construction resources. Logistical constraints associated with rail and port capacity and shortages in dry bulk vessel capacity at times, are expected to continue having an impact on the supply side of the seaborne iron ore market. As a result, spot prices are expected to remain near their historical highs in the short to medium term.

Manganese ore is smelted to produce manganese ferro-alloys (such as ferromanganese and silicomanganese). World consumption of manganese ore (based on International Manganese Institute statistics) increased by 7% in 2007, having declined by 0.5% the previous year. As 96% of manganese ore is consumed in ferro-alloy production, the performance of the manganese alloy industry is the key determinant of ore demand. Manganese alloy prices in the coming year should remain underpinned by higher ore prices and expectations of reducing exports from China, as government there continues its efforts to curtail alloy production through such measures as increased export tariffs.