The sluggishness in the global steel market has brought down both demand and spot prices of iron ore. Currently, Indian iron ore (63.5 percent) is priced at $130/mt CFR Chinese ports, down $20/mt compared to late June.
In China, the steel producers who have signed quarterly contracts with the overseas miners are unlikely to benefit from the price decreases in the iron ore spot market as their quarterly iron ore contract prices are based on the average prices in the spot market during the last quarter.
As the low season approaches for the downstream industries in China, the weakening demand in the auto market as well as the abovementioned situation in the iron ore market will exert considerable pressure on Chinese steel mills in the third quarter.