Prices of ex-Australia
iron ore of 62 percent Fe content for delivery to
China's Qingdao port, which moved in the range of $49.5-53/mt CFR last week, have decreased by $1/mt since last Friday, starting the current week at $50-50.5/mt CFR
China. As of May 23, inventory of
iron ore at 33 major Chinese ports amounted to 95.61 million mt, up 2.04 million mt or 2.18 percent compared to the inventory level recorded on May 16, as announced by
China's Xinhua News Agency.
Iron ore prices in
China have generally moved down over the past week, declining by a total of eight percent, though they increased by $1.5/mt on Friday, May 27. The downward trend seen in the Chinese futures exchange market last week has contributed to the declines recorded in
iron ore prices. However, the main problem seems to be the oversupply in the global
iron ore and finished steel markets which has influenced the ongoing declines recorded in the finished steel and semi finished steel markets in
China, which have impacted
iron ore prices negatively. On the other hand, finished steel and semi-finished steel quotations in
China are unlikely to improve in the short term. As a result, the downward movement of
iron ore prices is expected to continue in the coming period.
Earlier this month, Daniel Hynes, senior commodities strategist at ANZ, suggested that the main factors governing the trend of iron prices were fundamental factors rather than speculation in Chinese commodity futures. Hynes predicted that demand and supply will continue to support
iron ore quotations, and so he is not expecting prices to push back below $50/mt on a sustainable basis.
However, Goldman Sachs Group analysts Christian Lelong and Amber Cai are expecting a growing surplus of seaborne supply to drive an increase in port inventories, while they foresee that stocks will increase as new mining capacity ramps up in the second half of 2016 and as Chinese demand declines. Goldman Sachs' forecast for
iron ore prices for this quarter is still at $55/mt and at $45/mt for the July-September quarter. Meanwhile, the investment bank has reduced its forecast for the fourth quarter of 2016 by $2/mt to $38/mt, compared to the figure given in its forecast earlier this month.