The prices of ex-India 63.5 percent fine iron ore have exceeded the level of $140/mt CFR China, thus indicating an increase of nearly 70 percent from the level of last year. The latest offers have even reached $150/mt CFR. Meanwhile, the prices of ex-Australia and ex-Brazil iron ore are at around $115-120/mt CFR China.
Due to the strong domestic steel market in China, the increases in iron ore prices since July 2007 have been accepted by the buyers. Meanwhile, iron ore traders who purchase large quantities from abroad and sell by dividing into smaller cargos at the Chinese ports have increased their stocking activities sharply leading to congestion at some of the ports in China. According to reports, iron ore stocks at the major Chinese ports have increased by around 4.11 percent compared with last week.
China imported 187.9 million metric tons of iron ore in the first half of 2007, up 16.46 percent compared with the same period of last year. China imported most of its iron ore from Australia, which accounted for 38 percent of total imports.
The sharp difference between the CFR prices of Indian ore on the one hand and Australian and Brazilian ore prices on the other hint suggests that the prices of iron ore in the annual contracts between the Chinese mills and the major iron ore producers might also increase by a large scale.
Meanwhile, some analysts in China are forecasting that China's iron ore imports will decrease in the remaining part of 2007 due to the limited growth of national steel production capacity, the large stocks at the ports, the increased domestic iron ore production, the high prices of imported iron ore and the high freight costs.