Prices of iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which fluctuated last week in the range of $56.5-58/mt CFR China, have started this week in the same price range. Prices of iron ore have been moving in the range of $55-59/mt CFR since August. Meanwhile, further forecasts have emerged indicating that iron ore prices will likely move on a downward trend. For example, Australia & New Zealand Banking Group Ltd (ANZ) has reduced its price forecasts for iron ore for 2016 and 2017, since steel consumption in China has declined and as the country’s economic growth has slowed down. According to ANZ, iron ore prices may average at about $52/mt next year, 5.3 percent lower than previously forecast, and may average at $54/mt in 2017, a reduction of 10.5 percent from the previous forecast.
Also, Murilo Ferreira, CEO of Brazilian iron ore producer Vale, has said that the company has been focusing on reducing expenses as well as growing its market share ahead of the start of its S11D project, the company’s low-cost iron ore initiative. The Brazilian company plans to reduce the average cost of the iron ore it delivers to China to $30.8/mt by 2018 from $39.1/mt in the second quarter this year. As iron ore producers’ costs start to ease and as iron ore supplies increase accordingly, prices are expected to become more flexible.