Global iron ore prices have been experiencing a downturn since mid June’15. Spot iron ore fines prices lowered by USD 3/MT in last 2 days and currently are at USD 53.3/MT, CFR China. This price was last seen on 31 July’15. Also mid-July, prices touched a new 10-year low at USD 44.1/MT CFR China. Whether the prices will stagger down further is a question of concern. Market analysts anticipate that prices may touch a level of USD 40/MT.
Let’s see what factors may force prices to touch a much lower level.
- Spot iron ore prices have corrected by USD 13/MT since June’15. Prices have been continuously declining.
- Gap between demand and supply of iron ore in China has been widening. Iron ore producers continue to expand supply of raw material globally.Various big miners like Rio Tinto are planning to ship more iron ore (240 MnT) this year to China, which was 200 MnT last year.
- Devaluation of Chinese currency Yuan by 4.4% will now make import costlier for China. The country majorly imports from Australian miners.
- Chinese steel mills are hesitant of buying raw material since steel production is limited owing to weaker domestic demand and many countries are looking to curb import from China.
- Shanghai rebar hit an all time low of USD 304.5/MT today. Major reason for such downturn could be China’s slow economic growth and lesser steel consumption.
- Prices of spot billet in China also collapsed by RMB 80/MT during last week.
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