Having increased by 2.15 percent last week, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port have moved down by $0.4/mt as of today, Monday, December 10, as compared to the closing price at the end of last week, starting the current week at $65.2-66.3/mt CFR China. Additionally, inventory of iron ore at Chinese ports as of December 6 was recorded at 138.6 million mt, the lowest level this year.
Following the US-China decision on a 90-day trade dispute ceasefire, sentiment in the global market improved and steel prices increased. Consequently, global iron ore prices moved upwards in the first half of last week. However, the increases in iron ore prices could not be sustained due to the ongoing problems of oversupply and weak demand in the Chinese steel market, and also due to the concerns that the arrest of the Huawei CFO would impact the ceasefire between the US and China.
Meanwhile, Chinese steel producers, whose profit margins have been decreasing sharply due to the declines in steel prices, were booking import iron ore only to meet their immediate needs and mostly preferred to purchase from ore stocks at Chinese ports. Since China’s iron ore imports decreased and as Chinese mills preferred to meet their needs from the stocks at the ports, inventories of import iron ore at Chinese ports continued to decline.
Meanwhile, the Chinese iron ore futures market has started with the current week with a slight uptick following the news of new production cuts in the country after a second-level pollution alert. Global iron ore prices will likely fluctuate in the coming days against the backdrop of the production cuts to be implemented in Tangshan.