During the Chinese New Year holiday (Feb.18-24), prices for 62 percent Fe content iron ore for China moved on a stable trend at $63-64/mt CFR Qingdao port, since Chinese steel producers were on their vacation. Participants in the global steel market were wondering how iron ore and steel prices would be revised after Chinese players returned from their holiday. Looking at previous years, steel demand in the local Chinese market has generally increased after the Chinese New Year holiday. It was expected that Chinese steel demand wouls also increase after this year's holiday and provide support for iron ore prices. Contrary to this expectation, import iron ore prices for 62 percent Fe content iron ore, yesterday, March 5, declined below the $60/mt CFR threshold, to their lowest level in approximately six years at $59.75/mt CFR, while today, March 6, the price softened further to $59.5/mt CFR.
On March 5, speaking at the opening session of the National People's Congress, Chinese premier Li Keqiang announced China's national economic growth target as seven percent, the lowest level since 2009. While reflecting the economic slowdown in China, the announcement is thought to be the main reason for the sharp decrease in iron ore prices in the country. Also, as of the start of 2015, the Chinese government has put stricter environmental protection laws into action and some steel mills have had to restrict their production due to these laws. Since the Chinese premier has also underlined that more environmental protection measures will be applied, more Chinese steel mills are under threat of having their production restricted in the coming days. The environmental measures in question may be considered a step in order to ease the oversupply problem in the Chinese steel market and it is certain that this situation will support the downtrend of imported iron ore prices in the country.