Global iron ore prices were seen at around USD 43.4/MT, CFR China on 24 Nov’15. Yesterday, prices have touched again to a new level of 10-year low at USD 44.2/MT, CFR China, which had also occurred in the month of Jul’15.
Low profitability to Chinese steel mills has cut the utilization rate of iron ore among Chinese steel mills. Production cut by many steel mills both big and small in China has lowered down demand.
Shanghai steel future seems to be weak in near-term. Steel prices are still under pressure and struggling a way long to get some stability. Moreover, weak steel demand in China is pressurizing more on iron ore prices, forcing it to move down further, which are now already at 10-year low.
Another important point to considered is ‘The Global Glut’. Oversupply of low cost iron ore in the market has worsen the situation. At this time, steel demand is already shrinking, but on the top of it, oversupply has harmed the manufacturers as well. This has also caused prices to fall by about 38% this year; on course of a second consecutive decline this year.
Iron ore inventory at major ports in China has witnessed a consistent increase as compared to Oct’15. On 30 Oct’15, inventories were recorded at 85.8 MnT and by 20 Nov’15, it has increased to 87.6 MnT.
In outlook, it seems that prices will fall further in the coming time and may touch to a level of USD 40-42/MT, CFR China by Mar’16 end.
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