New mining projects and Chinese automotive demand will prove positive for the Latin American steel industry, according to Deloitte’s head of global metals, Nick Sowar, speaking at the Alacero conference in Lima, Peru.

With 300Mt of iron ore production capacity coming on stream this year and an estimated 183Mt next year, South America’s share will be 147.5Mt and 61.3Mt respectively.

According to Sowar, iron ore prices have dropped 4% over the past six months and will drop further as China increases domestic production. Over the past three years, Chinese ore production has out-stripped imports.

Sowar believes that average annual growth in iron ore demand will slow to 2% through to 2025 as supply outpaces demand on a global scale.

China's scrap iron inventory will rise to 400Mt by 2035 from its current 57Mt and this will reduce iron ore prices, claimed Sowar, adding that an iron ore price ceiling of US$125-130/t is likely in the foreseeable future.

Global iron ore demand will rise to 2.3Bt by 2025 from 1.93Bt in 2013, with over half of that coming from China, according to a report by World Steel Dynamics (WSD).

According to the WSD report, iron ore demand will rise to 2.3 billion tonnes by 2025 from its current 1.93 billion tonnes and demand in Latin American will rise from its current figure of 33Mt to 48Mt over the same period.
In 2012, global steel production stood at 1.55Bt, with Latin America accounting for 65.7Mt.