MetalMiner’sÃ‚Â own Stuart Burns announced earlier this week that ArcelorMittal, the largest steel producer in the world, decided to cut steel output at a shocking rate — cutting 40 percent or more in the fourth quarter. Rio Tinto, the world’s third largest production-oriented miner and second largest iron-ore miner, quickly followed suit and recently selected to cut their iron-ore production. At the same time, Fortescue Metals settled on a similar 10 percent output cut.
As we reported earlier,Ã‚Â steel is becoming quite the steal, and prices forÃ‚Â iron-ore, an essential steel ingredient, fell at a drastic rate in recent months. Iron-ore prices dropped more than 50 percent, and Stuart and Lisa used the MetalMiner Indx(SM) yesterday to calculate that prices for both iron-ore and steel could fall even more. We still haven’t seen rock-bottom.
“Rio this morning said it expected to ship 170 million to 175 million tons of iron-ore this year, down from earlier expectations of about 195 million tons,”Ã‚Â an onlineÃ‚Â Australian newspaper reported. Meanwhile, Vale, the same company that flaunted price hikes last month, announced some price cuts and output cuts of their own: “Less than a fortnight ago, Brazilian rival Vale cut its iron-ore production by 10%, or 30 million tons, meaning about 50 million tons of iron-ore has been removed from the market.”
BHP Billiton, still pursuing a bid for Rio Tinto, is one of the few companies with no plans to cut production. For even more on the matter, visit this morning’s post on SpendMatters, which delves into the iron-ore market and Rio Tinto’s current industrial role.