Having closed last week with a downward movement, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port have increased by $1.26/mt on the first working day of the current week to $98.36-99.45/mt CFR China.
On May 27, Vale stated that its iron ore mine in Soco may collapse at any moment and this situation contributed to the concerns regarding tightness of iron ore supplies in the global market. Therefore, iron ore prices increased sharply in the first day of the week. In the rest of the week, the prices moved downwards.
Reuters has quoted Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong, as saying that a contraction in steel sales volume and new orders in May points to a poor steel demand outlook. China’s factory activity shrank more than expected last month, an official survey showed on Friday, heaping pressure on Beijing to roll out more stimulus to support an economy hit by a bruising trade war with the United States.
Lau stated that China’s steel Purchasing Managers’ Index slipped to the contraction zone along with China’s official manufacturing PMI, sharing her expectation that steel companies’ profitability would quickly deteriorate going forward. Meanwhile, commodity strategists at ANZ said in a note that the likelihood of supply-side issues persisting longer than expected are building in the iron ore market, noted Reuters.