Closing the previous week with a decline, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have decreased by $0.5/mt compared to last Friday, starting the current week at $74.6-75/mt CFR China. As of March 27, inventory of iron ore at 33 major Chinese ports amounted to 120.2 million mt, up 1.9 million mt or 1.61 percent compared to the inventory level recorded on March 20, as announced by China's Xinhua News Agency.
Over the past week, global iron ore prices have fallen by four percent, dipping below $75/mt for the first time since November 2016, due to the influence of various factors including the losses recorded on the Chinese steel futures exchange, the softening of Chinese semi-finished and finished steel prices, weak finished steel demand, and the rising inventories of iron ore at Chinese ports. Despite record increases in coking coal prices, the sharp declines in iron ore prices have ensured a continuation of the weak sentiment in the global iron ore market.
This week, while iron ore demand has remained weak in China, the high level of iron ore inventories at Chinese ports has continued to put pressure on prices. Meanwhile, market sources indicate that Chinese steel suppliers have returned to the export markets after a long absence aiming to reduce their finished steel inventories, boosting competition in the global steel market. Chinese suppliers are aiming to sell high volumes of finished steel at lower prices. Given their weak demand for raw material, Chinese suppliers are expected to put further pressure on iron ore prices in order to reduce their raw material costs in the short term.
“Growing supply, primarily from Australia and Brazil, is expected to steadily outpace demand growth over the rest of 2017,” Australia’s Department of Industry, Innovation and Science said in a quarterly report released on Friday, April 7. Ore prices may slump to $55/mt in the final quarter this year, the report said.