Prices of ex-Australia iron ore of 62 percent Fe content for delivery to China's Qingdao port, which moved in the range of $44.5-45/mt CFR last week, have increased by $1/mt since last Friday, starting the current week at $45.5-46/mt CFR China. Although iron ore prices have strengthened slightly with buyers slowly returning to the market, following the sideways movement seen during the Chinese New Year holiday, market players' expectations for iron ore prices are still downward.
Last week, South African and Australian iron ore producers made announcements regarding their 2016 production guidance. South Africa-based Kumba Iron Ore Limited, a subsidiary of UK-based mining giant Anglo American Corporation, has announced a reduction in its iron ore production guidance for 2016 from 36 million mt to around 27 million mt, due to the deteriorating price environment. According to the company, iron ore fundamentals have deteriorated on the back of declining global demand and growth in low-cost supply, particularly from Australia. Accordingly, rapidly changing market and economic fundamentals have resulted in the iron ore price falling faster and deeper than expected. As such, the group does not expect a significant recovery in the iron ore price over the medium term. On the other hand, in 2015 Rio Tinto's iron ore sales amounted to 336.6 million mt, up 11 percent year on year. According to Rio Tinto's statement, in the current year the company expects global iron ore shipments to reach 350 million mt. Meanwhile, international credit ratings agency Moody's has announced that it has changed its outlook for the European steel sector to negative as the sharp fall in steel prices weighs so heavily on profitability that it will take at least 18 months to return to levels close to those of 2014.