Prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port had started last week with a slight decrease, rose slightly to $87-88/mt CFR China in mid-week, failed to maintain their upward trend and ended up recording a decline of $1.84/mt for the week. Prices have started the current week with a decline of $2.33/mt to $82.86-83.96/mt CFR China. Meanwhile, prices of ex-Brazil iron ore with 65 percent Fe content have decreased by $1.38/mt at the start of the week to $95.41-96.41/mt CFR China.
Demand for iron ore in China is still at low to medium levels due to the sharp uptrend of iron ore prices caused by the tightening of supplies following the collapse of Vale’s waste dam in Brazil. In February, ex-Australia iron ore shipments to China decreased by five percent as compared to January, according to market sources. One of the other important reasons for the weakness of iron ore demand in China is the government’s environmental measures. As China’s top steelmaking city of Tangshan has indefinitely extended the highest level of smog alert measures and stated that mills will have to cut output by 40 percent, demand for iron in China is under pressure.
While iron ore production in Brazil has decreased due to stricter safety measures in mining activities, Chinese crude steel producers have slowed down their iron ore bookings as they are cautious about increasing their production given the current environmental measures. Under these market conditions, global iron ore prices will likely continue to indicate fluctuations in the short term.