Having recorded significant declines during the previous week, prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port have decreased by a further $2.5/mt compared to last Friday, starting the current week at $65.8-66.2/mt CFR China. As of March 27, inventory of iron ore at 33 major Chinese ports amounted to 121.47 million mt, up 1.27 million mt or one percent compared to the inventory level recorded on March 27, as announced by China's Xinhua News Agency.
Last week, declines in both Chinese domestic semi-finished and finished steel prices and rising iron ore inventories at Chinese ports put pressure on global iron ore prices, resulting in a nine percent decrease in iron ore prices compared to the previous week. The downward trend of iron ore prices started in the second half of March and the total decline in prices compared to four weeks ago currently stands at 27 percent.
This week, iron ore prices have continued to soften amid the weak sentiment caused by the 25 percent decrease in Chinese steel exports during the first quarter, rising iron ore inventories at Chinese ports, and the increase in liquid steel production in China despite the high level of semi-finished and finished steel inventories in the country. Chinese steel exporters have reduced their prices in order to step up their export sales and thereby liquidate high steel inventories. As a result, the declines in Chinese semi-finished and finished steel export prices have contributed to the downward trend of global steel prices. Market sources point out that the declines in iron ore prices have picked up speed due to the decreases in the global steel markets and add that global iron ore prices will likely see further declines in the short term.
Analysts at the research firm J Capital says that as of mid-April iron ore inventories at the Chinese ports have increased by more than a third compared to the first half of 2016. Given the nervousness surrounding the outlook for iron ore prices, about 60 percent of iron ore traders in China plan to cut their inventories this quarter, according to a survey by J Capital. As a result, the price of iron ore is likely to see a further decline of 10-15 percent this month, J Capital analysts forecast. On the other hand, analysts at Goldman Sachs expect to see iron ore prices of $60/mt in the second half of the year.