Prices of ex-Australia
iron ore of 62 percent Fe content for delivery to
China's Qingdao port, which moved in the range of $39.5-41/mt CFR last week, have increased by $1/mt since last Friday, starting the current week at $41-41.5/mt CFR. During the past week, demand in the global
iron ore market has declined, while buyers have maintained a wait-and-see stance due to the approach of the Chinese New Year. According to the report issued by
China's Xinhua News Agency on January 11,
iron ore inventories at 33 major Chinese ports amounted to 91.87 million mt, increasing by 1.87 million mt or 2.08 percent compared to January 4.
Last week, the
China Iron and Steel Association (CISA) announced that finished steel production in
China is expected to continue to decline due to the overall slackness in the Chinese finished steel market. This is foreseen to put pressure on
iron ore prices. Meanwhile, Citigroup has stated that the downward pressure on prices is mostly due to the oversupply in the market. In addition, Citigroup has further reduced its expectations for
iron ore prices, forecasting that prices will drop to $36/mt in 2016 and to $35/mt in 2017 and 2018. Its previous forecasts for
iron ore prices were for $41/mt in 2016, $39/mt in 2017 and $40/mt in 2018. Meanwhile, Citigroup also stated that
iron ore stocks at Chinese ports will probably exceed 100 million mt in the first quarter of the current year.
In the short term, demand for finished steel in the local Chinese market is expected to slacken ahead of the approaching Chinese New Year, placing further downward pressure on
iron ore prices.