Since May this year, iron ore prices, which were sliding below the level of $150/mt, have continued to decline, showing rapid decreases in August and hitting the lowest levels of the last three years. The price for Indian fines with 63-63.5 percent iron ore content moved down to $125/mt CFR in late July in China, while it indicated a sharp decrease in August, declining by a further $30/mt to $95/mt by the end of the month. The major reason for this significant decrease is considered to be the softening in steel demand in the Chinese domestic market.
In the meantime, Chinese steel mills have been trying to maintain their iron ore stocks at minimal levels and have reduced their purchase volumes, amid weak demand and price softening for steel products. If Chinese steel producers continue to reduce their iron ore stocks, market sources believe that iron ore prices will likely decline further.
The sluggishness of the Chinese economy can be also seen in the purchasing managers index (PMI) for the Chinese manufacturing sector, which fell to 49.2 in August, its lowest level in the past nine months, reflecting the slackness of production and buying activity in China.
After last week's sharp decline, iron ore prices in the first two days of this week have been trending sideways.
SteelOrbis has learned from market sources that the price for Australian PB fines with 61.5 percent iron content is at $89-91/mt CFR, while the price for Australian Yandi fines with 58 percent iron content is standing at $78-80/mt CFR. Both price ranges have indicated a decline of $7/mt as compared to last week.
In the meantime, SteelOrbis has further learned that the price of Indian fines with 63-63.5 percent iron content is at $93-95/mt CFR, indicating a decrease of $8/mt since last week, while the price of Indian fines with 61-62 percent iron content has softened by $7-8/mt over the same period and is currently at $88-90/mt CFR.