Having closed the previous week with a sharp decline, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have moved down further by $0.5/mt on Monday, September 25, compared to last Friday, starting the current week at $62.65-63.35/mt CFR China.
Last week, global iron ore prices decreased by 9.5 percent week on week since the Chinese steel futures market moved downwards after the municipal authorities in Beijing announced that effective from November 15 to March 15 they will suspend construction work on major public projects in the city during winter to improve air quality. Meanwhile, global iron ore prices declined by 20 percent during the past month.
Market sources state that Chinese buyers have slowed down their iron ore bookings due to the softening of steel demand in the domestic market and this situation has brought downward pressure to bear on iron ore prices. Meanwhile, Caroline Bain, chief commodities economist at Capital Economics, has stated that the declines in iron ore prices have probably been driven by the realization that, if large amounts of steel capacity are taken offline during the winter months, this will mean lower demand for iron ore. “August activity and spending data suggested that the Chinese economy is starting to slow. We expect the price of iron ore to fall further and to average just $55/mt in the fourth quarter” said Bain.