Oversupply of iron ore in China is killing domestic miners

Iron ore production in China has been declining since April due to the closure of many mines in the country, according to a fundamental analysis by Goldman Sachs Group Inc, but commodities continue to be shipped in surplus by sea.

Iron ore output from mines in China is down more than 20 percent from the previous year, although the decline could be larger, analyst Christian Lelong said in a report based on banking analysis from Global Investment Research.

Global iron ore prices have dropped 40 percent this year amid increased production of iron ore by Australian giants BHP Billiton, Rio Tinto and Vale. These miners have learned to mine iron ore at a low cost, and growing reserves are flooding China, which is on a course to slow economic development.

According to analysts at Macquire Group Ltd, the Chinese market is on the verge of a significant transition to a decline in the importance of iron ore mining, as the price of the material decreases, and large miners reduce the cost of the process of extracting raw materials. In this regard, next year, Chinese iron ore production is expected to decline by more than 30 percent.

The report also says that the lack of regulation of iron ore supplies could lead to a real overflow in the country, despite the fact that the production of iron ore in the country is declining and producers have not yet fully experienced the effect of the iron ore price of $ 80 per ton. ...