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Russian and Ukrainian iron ore export outlook

On April 28-29, the IX International conference CIS Steel and Raw Materials in the World Markets was held in Moscow. Nick Filkevich, project manager of Metal Expert Consulting delivered the report “CIS iron ore exports outlook”.

Key issues of the report:

- the share of China in CIS iron ore exports continue to decrease disregarding the trends in domestic and export markets of Russia and Ukraine;

- export prices for Russian iron ore concentrate have been declining in the first months of 2014 in line with the global benchmark (price for Australian 62% fines to China);

- the outlook for Russian and Ukrainian iron ore export prices is based on current and future developments of production cost. At present, the minimum possible price for Russian concentrate supplied to China is $75-80/t CFR, for other suppliers this level would be at $85-90/t CFR;

- a slowdown followed by a decrease in consumption (and production) of steel in China as well as expected development of electric steel production (thanks to increase in scrap generation) will depress iron ore demand in China in medium-term outlook. Competition in iron ore segment will keep tightening to entail further decrease in average annual prices;

- according to our estimates, the only way for Russian iron ore suppliers to maintain exports is to actively invest into optimization of production and transportation costs.

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