Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which moved in the range of $50.5-52.5/mt CFR last week, have decreased by $0.5/mt since last Friday, starting the current week at $51.5-52/mt CFR China. As of June 6, inventory of iron ore at 33 major Chinese ports amounted to 95.53 million mt, up 770,000 mt or 0.8 percent compared to the inventory level recorded on May 30, as announced by China's Xinhua News Agency.
Iron ore prices, which started the month of June on a downward trend, began last week with a rising movement due to the increases in crude oil prices and also since Chinese buyers replenished their inventories before the Dragon Boat Festival holiday (June 9-12). After moving sideways beginning from the middle of last week and during the holiday period, iron ore prices have started this week on a slight downtrend. However, considering the oversupply problem in the iron ore markets, iron ore prices are expected to move on a fluctuating trend and to lose value in the coming period, while the expectations of a decline in steel demand in the Chinese domestic market have gained strength due to the start of the summer season, which is traditionally sluggish.
Market analysts have already stated that iron ore prices will move downward in the long term due to weak demand and global oversupply problem, while updates to forecasts have also been made lately. National Australia Bank (NAB) has predicted prices will drop to $40/mt in 2017 as Chinese steel consumption continues to decrease. The NAB forecast has followed by a more optimistic update from Citi, which has increased its projections slightly to an average price of $49/mt this year and $42/mt in 2017.