Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port closed last week with an increase and have started the current week at $93.1-93.5/mt CFR China, up a further $5.8/mt compared to last Friday. According to a report issued by the China Iron and Steel Association (CISA), as of January 31 this year imported iron ore inventory at Chinese ports totaled 119.51 million mt, up 5.12 million mt month on month and rising by 21.1 million mt year on year.
Global iron ore prices started the past week with a decline, following a decrease in Chinese futures prices, and then switched to an upward movement on Tuesday, February 7 when futures prices moved up. Starting from Tuesday, global iron ore prices saw a steady increase, finally reaching $86.51/mt on Friday, which was the highest price level seen since September 2014. During the past week, iron ore prices have increased by almost 0.8 percent.
At the start of the current week, with support from the highest level of Chinese iron ore futures prices of the past two years, global iron ore prices indicated a sharp increase. However, market sources do not expect any recovery in iron ore demand in the short term since Chinese buyers had increased their iron ore inventory levels before the Chinese New Year holiday. As there has not been any significant recovery in Chinese semi-finished and finished steel demand and given the weakness of iron ore demand, market sources believe that the current increases observed in iron ore prices are only speculative. With iron ore inventories in China at a historical high and considering the sluggishness of iron ore demand, iron ore prices are expected to soften in the short term. However, global iron ore prices will likely continue to move up if the futures prices maintain their upward trend.