After the sharp price declines recorded in the
iron ore market at the beginning of April, prices trended upwards starting in the third week of the month and had increased to $60/mt CFR
China's Qingdao port by April 28 for
iron ore with 62 percent Fe content. The uptrend of
iron ore prices came as a surprise to the global market, especially as prices increased by around 27 percent over two weeks. The main reasons for this upward movement were the rumors of financial incentive measures to be implemented by the Chinese government to boost the domestic economy and the announcement of Australian miner BHP Billiton of the postponement of its port project aimed at increasing its annual production capacity. Although the price level of $60/mt was still around 10 percent lower than the minimum price level of $67/mt recorded in the SteelOrbis Reference Prices for 2014, it provided some hope for Chinese
iron ore miners, which had been forced to halt their production activities due to cost pressures. However, upon closer inspection, it is clear that the increases recorded in prices were artificial and unsustainable.
On Wednesday, April 29,
iron ore prices moved downward in line with market expectations and closed last week at the level of $56.5/mt CFR Qingdao. Prices for 62 percent Fe content
iron ore opened the current week at the same price level, while some market players believe the downward trend will continue in the coming days. However, some other market players think import
iron ore deals will accelerate in the coming period due to declining stock levels at Chinese ports, providing support for
iron ore prices.
On the other hand, a recent announcement of the
China Iron and Steel Association (CISA) stated that the Chinese steel industry may benefit from the infrastructure projects planned as a part of the Chinese government's "One Belt, One Road" strategy. However, in general, the CISA underlined that very difficult times lie ahead for the Chinese iron and steel sector in the short term. According to the CISA data, medium and large-scale iron and steel companies in
China have lost 1.78 billion dollars in the first quarter of 2015. In addition, the CISA has called on the Chinese government to cut taxes further for local
iron ore miners.