Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which moved in the range of $63.80-65.65/mt CFR last week, have increased by $2.1/mt since last Friday, starting the current week at $67.27-67.75/mt CFR China. As of October 31, inventory of iron ore at 33 major Chinese ports amounted to 99.21 million mt, up 400,000 mt or 0.4 percent compared to the inventory level recorded on October 24, as announced by China's Xinhua News Agency.
Over the past week, iron ore prices have moved upwards due to the ongoing rising trend in the Chinese steel futures market and due to the increases in global coal prices. Iron ore prices, which moved on a general upward trend since the beginning of October, have increased by a total of $10/mt during the course of the month. Meanwhile, the municipal government in Tangshan has announced that as of November 4 all sintering machines at local steelmaking enterprises must stop production, while all blast furnaces, as well as all cement mills, rolling mills, casting mills and glass producing enterprises must halt their activities until further notice, in order to reduce heavy air pollution. Following this announcement, the Chinese steel futures market has started to move up with the beginning of the production cuts and this has in turn caused iron ore prices to move upwards.
Meanwhile, the devaluation of the Chinese currency against the US dollar is considered to have provided significant support for the upward trend of iron ore prices and the Chinese currency may lose further value against the US dollar due to the strong likelihood that the US Federal Reserve will hike interest rates in December. As a result, iron ore prices would receive further support. According to Goldman Sachs Group, iron ore’s eye-catching rally to the highest level since April is probably due to the weakening of the Chinese currency and it may decline further against the dollar and help to sustain prices of the raw material. About 60 percent of the iron ore price rally in October can be explained by the depreciation of China’s currency, according to estimates of Goldman Sachs.