Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which began last week at $54/mt CFR China, declined to $53.5/mt CFR on Tuesday, August 25, and increased to $55.5/mt CFR by the end of the week. Iron ore prices have continued their uptrend this week, starting the week at $56.5/mt CFR China. Even though prices of iron ore of 62 percent Fe content for delivery to Qingdao, which had declined to a six month-low of $44.5/mt CFR on July 8, have remained at over $50/mt CFR in the recent period, forecasts regarding the trend of iron ore prices point to downward movement. London-based research company Capital Economics has stated that iron ore prices will likely decline to $50/mt below by the end of September and will decrease to $45/mt by the end of this year. Previously, US-based investment bank Goldman Sachs and Canada-based RBC Capital Markets had announced similar outlooks.
The main factor influencing iron ore prices seems to be supply. Despite the economic slowdown in China, the biggest iron ore producers, such as Australia-based Rio Tinto and Brazilian miner Vale, are increasing their production and this situation is creating an expectation of a downtrend in iron ore prices. Another factor, which is expected to increase global iron ore supply, is the Roy Hill project, which will be commissioned by Australian-based Hancock Prospecting, owned by Gina Rinehart. The first iron ore shipment from the Roy Hill mine is planned to be made on September 30, though delays may occur in the short term.