Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which closed last week on a sideways trend, have increased by $0.2/mt since last Friday, starting the current week at $81-81.4/mt CFR China. As of January 18, inventory of iron ore at 33 major Chinese ports amounted to 103.2 million mt, up 650,000 mt or 0.63 percent compared to the inventory level recorded on January 10, as announced by China's Xinhua News Agency.
During last week, global iron ore prices increased by four percent with the support of rising prices of semi-finished and finished steel in China, while global coking coal prices have continued their downward trend, decreasing by two percent.
Despite the global oversupply of iron ore and the weakening of iron ore consumption resulting from the cuts in crude steel production by Chinese mills, investments in iron ore mining continue as global iron ore prices continue their strong trend contrary to expectations. Last week, Brazil-based iron ore producer Vale announced that it had loaded the first shipment of iron ore from its S11D mine. According to The Australian, a billionaire family from New Zealand - the Todd family which owns Todd Corporation - has signed an agreement with the Western Australian government in order to make an investment of $5 billion in an iron ore project in the Pilbara region, which could ship 50 million mt of iron ore per year.
Meanwhile, most market players think that the current level of iron ore prices is high given the current oversupply problem and reduced demand, and that increasing iron ore supplies may negatively impact iron ore prices in the long term. In the short term, iron ore prices will likely continue to fluctuate in line with the Chinese futures markets and prices in the local Chinese steel market.