Improvements in iron ore supply and concerns about demand in China during the winter pushed down iron ore prices by $2/mt on Monday, November 4. Today, Tuesday, November 5, iron ore fines with 62 percent Fe content have stayed unchanged at $83/mt CFR, while Brazilian iron ore with 65 percent Fe has been at $91/mt CFR, SteelOrbis has learned. Some further price decrease is possible in the market in the near future and analysts predict lower price of the raw material next year, though a large drop is still not predicted.
Demand in China has been limited with only two deals concluded at the COREX trading platform. About 170,000 mt of Brazilian blended fines with 62 percent Fe content have been traded at $82.7/mt CFR for late November-early December shipment. Another contract for 80,000 mt of Newman lumps with 62.8 percent Fe has been sold based on the December index plus $0.21/mt.
At the same time, supply of iron ore from Australia and Brazil has been growing gradually recently and will keep going up. On Friday, Brazilian miner Vale said it would recover about 8 million mt per year in capacity, as it restarts the Alegria mine.
As a result, most market sources believe that iron ore prices will be fluctuating near $80/mt CFR or slightly lower until the end of the year.
According to Tracy Liao, research analyst at Citi, average prices for 62 percent Fe iron ore fines may fall from $94/mt in 2019 to $80/mt in 2020 as the industry is recovering from Vale’s tailings dam accident in January. About 30-40 million mt per year of supply from Vale have already come back to the market from the 90 million mt per year loss predicted by the company in the beginning of the year. However, the analyst said that weather-related disruptions may prevent prices from recording a significant drop in 2020. In 2021, Citi expects iron ore will reach $60/mt.