JOHANNESBURG (miningweekly.com) – Iron-ore prices strengthened during the third quarter of this year despite a 7% increase in global iron-ore supply and thin steel mill margins.

Steel production in China has in the year to date increased by 3%, driven by a strong increase in exports, with lower domestic iron-ore production, less steel scrap usage and low iron-ore inventories at Chinese ports providing further price support.

Government stimulus and signs of the Chinese economy stabilising also helped support the iron-ore market.

On average in the year to date, Anglo American company Kumba Iron Ore achieved a consistent 66:34 lump:fine ratio and an iron content of 63.5%, which improved in quarter three to 64.1%. This translated into an average year-to-date realised free-on-board export iron-ore price of $110/ wet metric tonne (wmt), 10% above the average benchmark price of $100/wmt.

Kumba produces iron-ore at the Sishen and Kolomela mines in South Africa’s Northern Cape and exports it to China, Japan, South Korea, Europe and the Middle East.

“Ongoing rail and port challenges have increased our focus on cost optimisation and initiatives to match production and optimise logistics capacity,” said Kumba CE Mpumi Zikalala.

Kumba is continuing to work with State rail enterprise Transnet, the Ore User’s Forum (OUF) and National Logistics Crisis Committee towards achieving a sustainable logistics network to allow the JSE-listed company to deliver long-term value to its stakeholders.

Total third-quarter production of 9.7-million tonnes is up 4% compared with second-quarter production but 2% down on last year’s third-quarter performance.

Iron-ore sales of 8.9-million tonnes were 12% down on the third quarter of last year owing to Transnet equipment failure and adverse weather conditions at Saldanha Bay Port, where finished stock levels rose to 1.8-million tonnes.

Stock at the mines remained at 7.2-million tonnes, bringing total finished stock levels to 9.0-million tonnes compared with 4.6-million tonnes for the corresponding period of last year.

Notwithstanding Transnet’s third-quarter rail performance improving, its port terminal at Saldanha Bay experienced stacker reclaimer, ship loader and blocked chute disruptions.

“While we have retained our full year 2023 sales guidance, subject to logistics performance, Kumba has in conjunction with our OUF peers, worked closely with Transnet to prepare for its annual logistics maintenance shutdown.

“The port reopened on schedule on 15 October and we were able to ramp up efficiently with improved levels of finished stock at Saldanha Bay Port ensuring that we had sufficient stock for shipments,” the company stated in a media release to Mining Weekly.