According to the UNCTAD Iron Ore Trust Fund's summary of the global iron ore market in the first half of 2005, the pace of iron ore production increase has slowed down. During the first half of 2005, global production reached over 616 million tons, an increase of 6.8% compared to the first half of 2004 with exports accounting for 338 million tons. The strong growth rate that has prevailed since 2002 is maintained, albeit at a slightly lower level than in 2004. China continues to drive the increase in iron ore demand. Imports in the first half of 2005 were 131.3 million tons, a 34% increase. Chinese growth continues at the same rate as in the first half of 2004.

Based on statistics for the first six months and available country figures for more recent developments, total world production for all of 2005 is projected to reach above 1.250 billion tons. Exports are also likely to reach a new record figure approaching 700 million tons

Based on expectations that global steel consumption will remain relatively strong, iron ore prices are likely to rise again in 2006, although not by as much as in 2005. The price increase is more likely to be on the same order as in 2004, or 15% to 20%.

Australian production in the first six months of 2005 was 129 million tons compared to less than 115 million tons in the same period in 2004. Iron ore output of Brazil was 124 million tons. Among the second tier producers, Ukraine, Venezuela, South Africa and Sweden there was also increased production. Exact Indian figures were not available but it is estimated that Indian production for all of 2005 will increase by more than 10%.

Several iron ore projects have been speeded up and logistics bottlenecks have been eliminated. New projects, both Greenfield and Brownfield, are continuously being announced. While some of the new projects are planned to enter into operation over the next year or two, it is probable that supplies will remain relatively tight over the next year at least.

For the longer term, a large number of new projects have been announced, and if all of them are realized, an oversupply situation could develop towards the end of the decade. This would be the case in particular if Chinese demand fails to grow at the same rates as in recent years.