Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China's Qingdao port, which had started the first week of June on a rising trend, continued this uptrend in the past week and closed the week at $65/mt CFR. As of today, June 15, import iron ore prices have decreased by $1mt to $64/mt CFR. According to the SteelOrbis Steel Reference Prices, this high price level for imported iron ore was last seen in January this year. Market players state that the main reason for the uptrend of import iron ore prices is the decline in iron ore inventories at Chinese ports. In the week up to June 8, total iron ore inventories at the 33 main Chinese ports decreased by 2.63 percent to 81.54 million metric tons - the lowest level since late 2013 - thereby providing support for the uptrend of import iron ore prices. Meanwhile, it is heard that iron ore inventories at Chinese ports mostly consist of low Fe content ore, while stock levels of iron ore of 62 percent Fe content, which is commonly used for steel production, is very low. Accordingly, stocks of import iron ore of high Fe content in China are rapidly being exhausted, especially given the strength of demand. Murilo Ferreira, CEO of Brazilian iron ore producer Vale, has stated that China's production of iron ore of 62 percent Fe content will this year be lower than 200 million mt and that Vale has a positive outlook regarding iron ore prices in the second half of this year.
From the beginning of April, when import iron ore prices were at $47/mt CFR, a 40 percent increase has been seen in prices up to the present, while over the same period rebar prices on ex-warehouse Shanghai basis have declined by 12 percent and Chinese rebar export prices have decreased by four percent. This indicates that the declines recorded in finished steel prices have so far failed to exert negative pressure on iron ore prices. Against this backdrop, the China Iron and Steel Association (CISA) published a report on June 12 in which stated that the Chinese steel sector will continue to face difficulties in the coming period amid the ongoing upward trend seen in iron ore prices and the declines observed in finished steel prices.
Despite the ongoing increases recorded in iron ore prices, most market sources still believe that import iron ore prices will decline once again in the second half of the current year. This prediction is supported by the investments of the major iron ore producers, the expectations of a decline in Chinese crude steel production and by the downward revisions of predictions for the Chinese economy.