Over the next two or three years it is forecast that the supply seaborne trade of pellets will grow faster than demand, after which it is expected that supply-demand gap will narrow. This differs from conclusions of studies performed two or three years ago, primarily due to the slowdown in the growth in demand for direct reduction grade pellets. Prior to the 'Asia economic crisis' it was fully expected that the growth in demand for this grade of pellet would continue at the level seen in the late 80's and early 90's. However, for reasons given in the report, this has changed and it will be three or four years before growing in demand for direct reduction pellets approaches levels experienced in early 90's. The growth in demand predicted for blastfurnace pellets is in line with previous studies made, with the main growth in Asia, supplementing the current deficit in lump ore and the decline in use of domestic ore. Some growth is expected in Europe as a replacement for sinter plants closures. Demand for seaborne traded pellets in North America has grown over recent years and the closure of some older inefficient taconite mines is expected to continue to give some growth in this area. However, this will be limited as the North American steel industry will certain undergo considerable rationalization in the medium term. Finally, we believe that facilities and strong management system at Samarco will be central to Samarco to deliver increasing value to stakeholders enhancing Samarco's position in the seaborne pellet market.
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