Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which had started last week at $61/mt, moved on a fluctuating trend during the week and closed the week at $60.5/mt CFR. As of today, June 29, import iron ore prices have decreased by $0.5/mt to $60/mt CFR. Despite the decrease in overall iron ore inventories at the 33 main Chinese ports, iron ore prices have been coming under increased pressure due to the downtrend of prices in the local Chinese finished steel market in the past two weeks. The decreases in domestic finished steel prices have been prompting Chinese steel producers, who are seeking to reduce their costs, to look for lower iron ore prices in new transactions. With the decrease of iron ore prices to $60/mt CFR, Chinese producers are expected to accelerate their iron ore bookings slightly. As a result, iron ore inventories at Chinese ports are expected to reach higher levels in the coming period, increasing the downward pressure on iron ore prices. To sum up, in the short term, import iron ore prices in China are expected to be determined by inventory levels at Chinese ports and by the trend of prices in the Chinese finished steel market.
On April 2 this year, import iron ore prices in China had decreased to $47/mt CFR, following the statements from major overseas iron ore producers which indicated that global iron ore supplies would continue to increase. Subsequently, the downtrend of iron ore prices had been replaced by upward movement due to the influence of low inventory levels at Chinese ports. Market players state iron ore prices could possibly decrease below the critical $47/mt CFR level in the last quarter of 2015, since the 55 million mt per year iron ore mine to be commissioned by Roy Hill project in Australia will start production in September and also due to Brazilian iron ore producer Vale’s investment plans, which are expected to start contributing to increased supply.