Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China's Qingdao port closed last week with a decrease and have started the current week at $92.2-92.6/mt CFR China, up $2/mt compared to last Friday, February 24. Additionally, according to Reuters, inventory of iron ore at 46 major Chinese ports has continued to rise, hitting 129.35 million mt, the highest level since 2004.
After increasing by $4.3/mt in the first two days of last week, global iron ore prices softened slightly during the rest of the week, though still closing the week 1.5 percent higher than the price level recorded at the end of the previous week. As a result, the total increase recorded in global iron ore prices since the start of 2017 has reached approximately 19 percent. Meanwhile, it is observed that global iron ore quotations have started the current week with an upward movement with the support of the increases seen in the Chinese steel futures market.
The Chinese futures market started the week with an increase due to the Chinese government's decision to cut production in order to reduce environmental pollution. SteelOrbis has been informed that the Chinese government has asked steel producers in Hebei, Tianjin and Beijing to cut their production to ensure a reduction in environmental pollution ahead of the start of the National People's Congress on March 5. It is also heard that, with atmospheric pollution reaching serious levels in Hebei, measures are planned to cut molten steel, iron ore and coking coal outputs in the region.
While the supply volume of crude steel in China is expected to decline in the coming period, demand for semi-finished and finished steel in the country is foreseen to increase with the arrival of spring. Accordingly, although iron ore inventories are currently on the high side, quotations of iron ore and steel are expected to continue their upward movement in the period ahead.