Having closed the previous week with an increase, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have decreased by $0.7/mt on Monday, May 15, compared to last Friday, starting the current week at $60.4-60.8/mt CFR China.
Over the past week, the high level of iron ore inventories in China has continued to put pressure on global iron ore prices, and iron ore prices moved down amid minor fluctuations during the week. Although iron ore prices indicated some upticks when purchases accelerated, they followed a downward trend in general, with a seven percent decline week on week.
In the coming days, global iron ore prices will likely be negatively affected by lower demand because of the high level of iron ore inventories and the steel production cuts in China, and are expected to continue fluctuating on a downward trend.
In a revised outlook for the steelmaking raw material, BMI analysts say they expect prices to drop to $65/mt this year (down from a previous forecast price of $70/mt), to $50/mt in 2018, and to $44/mt by 2021. “Although the drop in iron ore prices happened earlier than we anticipated, it is in line with our long-held view that the rally in prices had gone ahead of weakening fundamentals and would face a correction in 2017,” the report said. Major producers, backed by low costs, will continue to boost output and so drag prices down, the research arm of Fitch Group said in the report. “This will be exacerbated by the further winding down of China's fiscal spending and the capping of residential house prices from 2018 onwards,” it warned.