Having closed last week with an upward movement, prices of ex-Australia iron ore with 62 percent Fe content for delivery to China’s Qingdao port have increased by $3.3/mt on the first working day of the current week to $106.23-107.41/mt CFR China.
Last week, global iron ore prices continued to move upwards since inventories of iron ore at Chinese ports were low and due to increased liquid steel production in China. Meanwhile, on May 17, Brazilian iron ore producer Vale announced that it had detected a potential collapse at the Barao de Cocais dam and this raised concerns that global iron ore supplies could decrease further in the coming period, causing the Chinese iron ore futures market to record sharp rises. As a result, global iron ore prices increased by two percent last week, remaining above $100/mt CFR China.
The Chinese iron ore futures market has started this week at its highest level since 2013, due to the low inventories at Chinese ports and concerns about tighter iron ore supplies for the coming period. Market sources state that global iron ore prices are expected to remain strong in the coming period as Chinese liquid steel producers, whose inventories are already insufficient, will likely increase their iron ore purchases due to the concerns about tighter supplies and due to the low inventories of iron ore at Chinese ports. Meanwhile, some market players consider the rises in iron ore prices to be speculative given the weakening of finished steel demand.