Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which were at $48.5-51/mt CFR last week, have started this week at $49-49.5/mt CFR China. While import iron ore prices in China have decreased to their lowest level since July this year, ore inventories at Chinese ports have continued to be on the high side. As of October 26, inventory of iron ore at 33 major Chinese ports amounted to 81.32 million mt, up 490,000 mt or 0.61 percent compared to the inventory level recorded on October 19, as announced by China's Xinhua News Agency. Since Chinese steel producers are unlikely to increase their production amid decreasing finished steel prices, inventories of iron ore at Chinese ports are expected to continue to rise in the coming period. Also, domestic steel enterprises in northern China are expected to reduce their steel production in November and December and this situation is expected to increase the pressure on iron ore prices amid weak demand and increasing inventories.
Even though prices of iron ore, which closed last week at $48.5-49/mt CFR, have started this week with a slight uptrend, the outlooks issued by investment banks for iron ore prices have remained the same. According to an analyst from US-based Goldman Sachs, as supply and demand continue to diverge, iron ore prices should fall below marginal production costs and trigger mine closures on a sufficient scale, and so iron ore prices are still expected to decline to $44/mt next year and $40/mt in 2017. Meanwhile, Australia & New Zealand Banking Group Ltd (ANZ) has stated that there is still upside in port stocks, which is expected to continue to put some downside pressure on iron ore prices