Yesterday, November 18,
iron ore prices fell to their lowest level since June 2009, declining by $4/mt (six percent) on the day in question, with ex-Australia offers for 61.5 percent Fe content
iron ore declining to $71/mt CFR China. At the beginning of November, ex-Australia offers for 61.5 percent Fe content
iron ore had decreased to $75/mt - their lowest level since September 2009.
Due to the recent Asia-Pacific Economic Cooperation (APEC) meeting in Beijing, strict environmental protection requirements were agreed for the duration of the event and some steel plants halted their production. With these plants starting to resume their normal production activities at the beginning of the current week,
iron ore demand and prices were expected to rise slightly. Accordingly, the unexpected declines seen in
iron ore prices have been received with surprise in the market.
Iron ore prices, which were at $133/mt in the beginning of 2014, have since lost almost 50 percent of their value. The main reasons of the softness of
iron ore prices are the investments of large
iron ore producers which have created oversupply in the global market and the mining companies' price policy adjustments in line with their lower production costs.
Chinese steel producers have traditionally increased their
iron ore purchases and stocks coming towards the end of the year and the New Year holidays. However, this year they have started the last quarter with high stock levels and so their demand for
iron ore is lower than in previous years, putting additional pressure on
iron ore prices. Investments of large
iron ore producers have continued, while
iron ore prices are likely to continue falling in the coming days considering the high stock levels in the market.