Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which moved in the range of $41.5-43/mt CFR last week, have decreased by $1/mt since last Friday, starting the current week at $40.5-41/mt CFR. Despite improved market sentiment following previous increases in iron ore prices, the low number of transaction volumes, the tightening of environmental controls, and the expectations of increased crude steel production cuts at Chinese mills have exerted downward pressure on iron ore prices, resulting in the above price decline.
Meanwhile, Chinese buyers are still trying to keep their inventories low due to the approach of the Chinese New Year, while they are not in any rush to conclude new iron ore bookings amid the economic slowdown in the country. With the current conditions exerting negative pressure on iron ore prices, the downtrend of prices is expected to continue in the coming days.
On the other hand, in 2016 exports of Australian iron ore are forecast to grow by 13 percent to 868 million mt, while global iron ore trade is forecast to increase by 4.5 percent, according to a report by the Australian Government Department of Industry and Science. Increasing supply, particularly from Brazil and Australia, and an increase in consumption of seaborne iron ore by China are forecast to provide support for this growth. On the other hand, the Australian government has reduced its iron ore price guidance for 2016 to $41.3/mt, compared to the previous forecast of $51/mt made in October 2015.