Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China's Qingdao port, which were at $56.5/mt CFR last week, have remained at the same level at the start of the current week. US-based investment bank Goldman Sachs and London-based Capital Economics have recently forecast a declining trend for iron ore prices. Goldman Sachs stated that iron ore prices will likely to decrease by 30 percent in the coming 18-month period, while Capitol Economics foresees that iron ore prices will likely decline to below $50/mt by the end of September and will decrease to $45/mt by the end of this year. Anticipations of a further decline in the global iron ore market are based on the increases seen in iron ore supply volumes. The world's second biggest iron ore exporter Rio Tinto has predicted that demand for iron ore in the global market will likely increase due to China's increased focus on construction of new steel buildings in urban areas. Rio Tinto has forecast that global demand for iron ore will reach three billion metric tons by 2030, which is equivalent to an average two percent annual growth in demand over the next 15 years.
In the period from August 28 to September 4, steel production cuts were implemented in northern China to improve environmental conditions for commemorations of the 70th anniversary of victory in the war against Japan. In the current week, steel production in northern China has started to recover to normal levels and market players are wondering how this will affect the trend of iron ore prices. Meanwhile, new Chinese economic data regarding inflation and import and export volumes will be announced this week, which will give hints about the state of the Chinese economy and which may also impact iron ore prices.