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 6 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.
(By Katharine Gemmell)
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