Having fluctuated during the previous week, prices of ex-Australia
iron ore of 62 percent Fe content for delivery to
China's Qingdao port have decreased by a further $1.5/mt compared to last Friday, starting the current week at $66.3-66.7/mt CFR
China.
Global
iron ore prices had also started the last week on a downward trend but increased as of mid-week as some Chinese steel producers concluded
iron ore purchases at reduced price levels and restocked. Despite their upward movement as of the middle of last week, global
iron ore prices have declined by 8.5 percent compared to the price levels seen a week ago.
Meanwhile, market sources report this week that, with Chinese steel export sales increasing, finished steel and semi-finished steel inventories in
China have declined slightly, though they are still at high levels. At the same time,
China's steel production still far exceeds domestic consumption. It is believed that global
iron ore quotations will continue to move downwards on a fluctuating trend in the coming period amid the high supply-low demand conditions in the global
iron ore market and also due to the steel surplus caused by
China and the high
iron ore inventories at Chinese ports.
In the meantime, Justin Smirk, senior economist at Australia-based Westpac Banking Corporation, has forecast that
iron ore prices will decline to $62/mt in the third quarter, to $59/mt in the fourth quarter and to $41/mt through 2018. Smirk stated that
iron ore prices will fall as supply increases and market players will start to ponder whether keeping stocks in hand is a good idea. Smirk said that developments in the global
iron ore market point to volatility and, with
iron ore prices currently moving down, if market players unwind their inventories, supply will increase and the downward trend of
iron ore quotations will gain momentum. Westpac's forecast for
iron ore prices is in contrast with the prediction of Australia&New Zealand Banking Group (ANZ) which foresees
iron ore quotations settling in the range of $70-80/mt over the rest of 2017. However, many other banks are pessimistic regarding the future trend of
iron ore prices. For example, London-based Barclays Plc believes
iron ore quotations may improve in the short term but will fall to $50/mt in the fourth quarter of 2017 as market fundamentals deteriorate.