World production, consumption and trade in iron ore in 1982 and 1983 were the lowest for a decade as a result of the sharp contraction in the steel industry in the developed market-economy countries. Though economic recovery is now well under way in the USA, and gross output is also expanding in Japan and the European Economic Community, the expansion has not so far had a significant impact on the world market for iron ore, particularly as regards demand and prices. As a consequence of the fall in demand, world iron ore shipments were reduced by some 12%, and though prices had risen by a similar proportion the increase in unit values was relatively small, so that total export earnings from iron ore shipments, in terms of USA dollars, fell by almost 10%. A recent feature of the market has been a tendency for buyers to shift away from long-term contracts to greater purchases on a short-term basis including some spot purchases, generally at lower prices than those paid for deliveries under long-term contracts.
The many uncertainties surrounding the market outlook, and the fact that overall capacity is expected to remain substantially in excess of production, are likely to restrain investment. Additional uncertainty is caused by the shift to short-term contracts, since this could affect access to funds for new mine development, for the financing of enrichment plants and for the purchased of bulk ore carriers.