Having closed last week with a fluctuating trend, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port decreased by $0.5/mt as of today, Monday, July 2, as compared to the closing price at the end of last week, starting the current week at $63.8-64.9/mt CFR China.
Global iron ore prices started last week with an upward trend, supported by the increases in Chinese iron ore futures prices and the week-on-week decline in iron ore inventories at ports. Chinese iron ore futures and the upward movement of iron ore prices in the spot market which continued on Tuesday were not impacted by the announcements by Canada and the EU that they will impose duty on steel imports. However, while import iron ore inventories at China ports declined, steel inventories in the country increased for the first time in 14 weeks, signaling the lack of strength of domestic steel demand in China and that the upward movement of iron ore prices will not be sustained. On Wednesday, global iron ore prices declined sharply, while this downward movement slowed down on Thursday. As for Friday, global iron ore prices recovered slightly, though declining by 0.8 percent for the given week amid fluctuations.
Last week, global iron ore prices also showed different movements depending on their Fe content. Accordingly, prices of ex-Australia iron ore of 62 percent Fe content recorded no declines and remained above the “benchmark” level. Meanwhile, the news that Chinese enterprises in several sectors, including steel, will be forced to comply with as many as 25 new emissions standards by October also supported the upward movement of prices for high quality iron ore, which increases production efficiency.
On the other hand, the China (Shanghai) Pilot Free Trade Zone Iron Ore Index has been launched in Shanghai as one of China’s moves to open up its commodity markets. Following the opening of iron ore futures trading at Dalian Commodity Exchange (DCE) to foreign capital in May, China has taken this second step to be more effective in the global iron ore market.
In the coming period, the increases in steel inventories and weakening steel demand are expected to exert downward pressure on raw material prices in China. As a result, global iron ore prices are expected to fluctuate depending on the iron ore futures markets and changes in inventory levels and to decrease week on week.