Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China's Qingdao port, which moved in the range of $40.5-42/mt CFR last week, have remained stable since last Friday, starting the current week at $40.5-41/mt CFR. During the week ending January 21, demand for import iron ore in China has remained at low levels despite the recovery seen in import iron ore prices.
According to the report issued by China's Xinhua News Agency, as of January 18 iron ore inventories at 33 major Chinese ports amounted to 93.63 million mt, increasing by 1.76 million mt or 1.92 percent compared to January 11. Meanwhile, import iron ore prices have remained under pressure due to increases seen in import iron ore inventories at Chinese ports. On the other hand, import iron ore prices in China are predicted to move sideways in the coming period due to the approach of the Chinese New Year.
A Brazilian court has temporarily suspended the activities of an iron ore port operating by Brazilian miner Vale in the city of Vitoria in the state of Espirito Santo, the company said on Thursday, January 21. According to Vale, a Brazilian court ordered the "temporary suspension of activities" of its Tubarao port. The port handles coal and also serves the needs of ArcelorMittal in Brazil. The court said it suspended the activities of the port, preventing both ArcelorMittal and Vale from using it commercially at both its iron ore and coal piers, due the pollution of the air and the sea. Vale and ArcelorMittal have been fined BRL 34.2 million each by the city of Vitoria due to pollution at Tubarao port.
According to Vale, the port closure has affected the loading of 200,000 mt of iron ore per day. There may be a rush to redirect iron ore shipments to Vale's other iron ore ports including Ponta da Madeira, Itaguaí and Guaíba Island terminal, said Mitchell Hugers, commodities analyst at BMI Research.
Hugers said that Australian iron ore producers are expanding their iron ore supply and so he believes that, with the use of other ports, the closure of Tubarao port should not impact iron ore prices.
Hugers predicted that oversupply in the global iron ore market will continue amid output expansions of the major Australian and Brazilian iron ore producers, the strengthening of the US dollar and due to the weak growth seen in the Chinese steel industry. Accordingly, Hugers' forecast for iron ore prices in the coming quarters is at $35-45/mt. On the other hand, Standard and Poor's (S&P) has reduced its expectations for iron ore prices, forecasting that prices will drop to $40/mt in 2016 and in 2017. S&P's previous forecasts issued in April 2015 for iron ore prices were for $50/mt in 2016 and $55/mt in 2017.