Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which moved in the range of $56.15-57.75/mt CFR last week, have increased by $1/mt since last Friday, starting the current week at $58.05-58.55/mt CFR China. As of October 10, inventory of iron ore at 33 major Chinese ports amounted to 95.91 million mt, up 2.16 million mt or 2.3 percent compared to the inventory level recorded on September 26, as announced by China's Xinhua News Agency.
Last week, iron ore prices, which had started the week with an upward movement in line with the increases in the Chinese iron ore futures market, decreased slightly in mid-week, but resumed their uptrend in the last days of the week amid the price increases seen in the Chinese domestic steel market. This week, iron ore prices have continued to rise amid the increases in global coal prices and the further rises in prices in the local Chinese steel market. However, Chinese steel producers have initiated production cuts at their mills in order to improve air quality and in particular more steel mills in Tangshan, Hebei started maintenance work early last week. As a result, crude steel output and finished steel supplies from Chinese mills are expected to decrease slightly in the short term. Accordingly, iron ore prices are expected to come under downward pressure and to continue to fluctuate within a narrow range in the short term.
Meanwhile, while iron ore prices remain strong, new statements have been issued about the outlook for the iron ore markets for the coming period. Following the announcement from the Australian Bureau of Meteorology regarding possible cyclones next year, the investment bank Macquarie stated that the cyclones could have negative implications for iron ore supply from Western Australia, as well as for metallurgical coal supply from Queensland. “The first quarter of each year is typically weakest for seaborne supply for both commodities due to wetter weather, and, with conditions expected to be more adverse than usual, these markets could stay tighter for longer” said Macquarie.