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Research of Russian iron ore market structure


In 2014, Metal Expert Consulting has conducted the research of Russian iron ore market and its players. The study shows the detailed structure of Russian iron ore market suppliers (producers of iron ore) and consumers (producers of pig iron and steel) in physical and monetary terms.

The research deals with the "free market" for iron ore formed by shipments to unaffiliated (non-integrated producers of iron or steel) companies in Russia. For each of the suppliers, the quality of the material (chemical composition) is provided. Besides, the dynamics of historic prices for iron ore in Russia (in the domestic market and also for export), pricing principles, including pricing formula for long-term agreements between the major players are given. The research provides a comparison of Russian and global prices and analyzes the difference.

In analyzing the structure of iron ore resources in the Russian Federation, we proceeded from the fact that:

- an integrated (with iron or steel producer) supplier can supply ore both to the same holding’s affiliated company and to other holdings, which have their own suppliers of iron ore

- a shipment of iron ore from a non-integrated supplier is a shipment to the “free market.”

As a result, over H1 2014 the in-house supplies account for more than 62% (22.1 million t) of total supply, while independent (non-integrated) suppliers have just 9% of the market (3.3 million t).

Over H1 2014, the capacity of the free domestic market is estimated at 13.6 million t or $1.028 billion.

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