Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China’s Qingdao port, which moved in the range of $48-50.5/mt CFR last week, have increased by $1.5/mt since last Friday, starting the current week at $50.5-51/mt CFR China. As of May 30, inventory of iron ore at 33 major Chinese ports amounted to 96.30 million mt, up 690,000 mt or 0.72 percent compared to the inventory level recorded on May 23, as announced by China's Xinhua News Agency.
Iron ore prices, which had declined by 32 percent throughout May, entered June on a downward trend. However, iron ore prices increased slightly on Friday, June 3, and started this week with further upward movement amid the recovery of crude oil prices. With the beginning of Ramadan today, June 6, trading activity in the global semi-finished and finished steel markets is expected to slowdown and so global iron ore prices are expected to move on a soft fluctuating trend and to decline in the short term. Furthermore, decreasing prices of semi-finished and finished steel in the global markets are expected to continue to exert downward pressure on iron ore prices in the coming period.
Following the declining trend of iron ore prices last week, analysts continue to state that iron ore prices will continue their downward movement in the long term, due to weak demand and the ongoing oversupply problem in the iron ore markets. Chris Chan, market analyst at HSBC, commented that China's steel sector Purchasing Managers Index (PMI) fell in May for the first time in six months and that market dynamics are getting worse, with signs of oversupply pressure and weakening demand. Meanwhile, Tim Murray, managing director of J Capital Research, shared his view that weaker demand in China will see Australian miner Fortescue achieve an average price for the second quarter of around $40/mt, compared to the current price of around $48/mt.