Import iron ore prices in China started the first week of June on a rising trend. Ex-Australia iron ore of 62 percent Fe content for delivery to China's Qingdao port began June at $62/mt CFR, ending the first week of the month at $64/mt CFR. Starting this week, import iron ore prices in China are still at this level. At present, import iron ore prices, which had decreased to $47/mt CFR in early April, have increased by 36 percent during the past two months. It is obvious that the low levels of iron ore inventories at China's major ports have supported the uptrend of iron ore prices in the given period.
Despite the recovery of import iron ore prices, Swiss-based global financial services company UBS has predicted that iron ore prices will switch to a downtrend in the second half of the year. The company stated that the current uptrend of iron ore prices will not be permanent, because major iron ore producers have plans to continue their investments to increase their production and also since China's steel consumption will be limited as domestic construction activity has slowed down following the excessive construction work carried out over the last few years. Meanwhile, Murilo Ferreira, CEO of Brazilian iron ore producer Vale, has stated that his company will increase its output capacity by 30 percent from 340 million mt to 450 million mt within two years and that they will also supply more high-quality iron ore products. Additionally, the Roy Hill iron ore mine project in the Pilbara region of Western Australia with 50 million tons of iron ore capacity will increase the global iron ore supply volume. All these investments support the prediction made by UBS. At the same time, some market players expect that the iron ore prices will maintain their current levels in an initial stage but will decline in the last quarter of 2015 when the Roy Hill project starts production. Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, has stated that he does not expect import iron ore prices to fall sharply in the second half of 2015 but instead to remain in a range of $55-60/mt CFR China.
Chinese producers' demand for iron ore is expected to impact the short-term price trend, while in the second half of the current year the investments of major iron ore producers, Chinese economic data and the country's crude steel production volume will be the main factors influencing the trend of iron ore prices.