Having moved upwards last week, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port have decreased by $1.14/mt on the first working day of the current week to $95.52-96.7/mt CFR China.
Despite the tension between the US and China, last week global iron ore prices increased by 1.82 percent, reaching the highest level recorded since July 2014, as a result of supply concerns since Vale was not allowed to restart production at its Brucutu mine in Brazil and since Chinese liquid steel producers increased their iron ore bookings slightly in order to replenish their inventories.
Global iron ore prices have started this week with a downward movement due to the declined in Chinese steel futures market and due to the depreciation of Chinese yuan against the US dollar. Last week, the Chinese Ministry of Ecology and Environment stated that steel producers should target ultra-low emission levels in order to improve air quality. As a result, Chinese steel producers have started to increase their bookings of high-quality iron ore in order to decrease emission levels and this situation has supported the upward movement of high-quality iron ore prices due to concerns regarding tightness of supplies. However, due to the approach of the rainy weather and summer season in China, steel demand in the Chinese domestic market is expected to decrease gradually and buyers will likely begin to exert pressure on steel prices. According to market sources, Chinese liquid steel producers are likely to struggle in terms of their profit margins amid high raw material prices, and iron ore prices are not expected to remain at high levels for a long time.