Prices of
iron ore of 62 percent Fe content for delivery to
China's Qingdao port closed last week at $54.5-56/mt CFR. At the beginning of the current week, prices of
iron ore prices of 62 percent Fe content are standing at $53.5-54.5/mt CFR Qingdao port. ANZ head of commodities Mark Pervan has commented that
iron ore stocks at Chinese ports have increased sharply due to the country's National Day Holiday (October 1-7). Pervan also stated that, despite the signals of a slowdown in steel activity in September and particularly in October, Brazilian and Australian
iron ore exporters are still operating at maximum capacity utilization. He added that
iron ore volumes coming out of Brazil and Australia are quite strong, while demand is equivalent to three quarters of supply levels.
Further declines are expected in
iron ore prices in line with miners' new projects to reduce costs. Last week, Vale chief financial officer Luciano Siani announced that the biggest project of the company, SD11, is ahead of the schedule and so the Carajas operations will be active ahead of the target of December 2016. The SD11 project will add 90 million metric tons of annual capacity to Vale's supply.
On the other hand, Australia has announced another decline in its
iron ore price forecast for 2015 and 2016, with the
iron ore price forecast declining to $53/mt from the previous forecast of $54.4/mt for 2015 and to $51/mt for 2016, according to a report by the Australian Government Department of Industry and Science. The report said that the recent price stability is forecast to be temporary as ongoing increases in supply and the onset of winter in the northern hemisphere, which affects construction, is expected to weigh on prices in the December quarter.
In 2015, Australia's
iron ore exports are forecast to increase by around six percent to 762 million mt supported by increased supply capacity. The low prices will continue to encourage Australian
iron ore miners to cut costs and improve productivity.