Having moved up last week, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port have decreased by $0.5/mt on the first working day of the current week to $94.98-96.08/mt CFR China. As of April 11, inventory of iron ore at 45 major Chinese ports amounted to 141 million mt, down 6.6 million mt or 4.4 percent week on week amid the fall recorded in the volume of iron ore procured from Australia and Brazil.
Iron ore prices in China followed a fluctuating trend last week in parallel with the movements of the steel futures markets. As a result of the seasonal rise in iron ore demand in China and also due to the ongoing decreases in global iron ore supply, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port increased by six percent last week, while export offers for high quality iron ore with 65 percent Fe content from Brazil moved up by five percent in this period.
Amid the weakness of finished steel inventories in China, Chinese steel futures markets have made a sharp upward start to the current week, while domestic demand is at good levels. Additionally, it is observed that steel production rates have increased after China mostly lifted its winter production restrictions, which had been imposed in order to protect the environment, causing raw material demand to increase. However, Chinese buyers consider iron ore prices to be very high, except for quotations of high quality iron ore with 65 percent Fe content, and so prices have come under further pressure and made a slight downward start to the current week.
Market sources expect Chinese end-users to continue to show demand for steel in the short term, while they believe this ongoing demand will positively influence the Chinese futures markets. As the problems on the supply side are not expected to be resolved in the short term, global iron ore prices are expected to trend in line with the movements of the Chinese steel futures markets.