Global iron ore prices have been witnessed a continuous downfall since Oct’15. On 30 Nov’15, iron ore prices for Fe 62% fines touched to a level of USD 42.8/MT, CFR China.
Prices have already touched below to a level of 10-year low and still heading towards further downfall. Globally, iron ore prices have tumbled down by 35% since the beginning of the year because of China’s slow economy growth and dull construction activities in the country. Oversupply from major miners is on the track to increase, which is a major reason behind price downfall.
Ginehart’s Roy Hill project, which was supposed to pump 55 MnT iron ore in the market, is all set to load its first shipment (cape size vessel) from the mine within this week. However, market analysts anticipate the upcoming shipments from Roy Hill will pressurize iron ore prices, although the producer says 90% of its output will be for long term agreements and it won’t pressurize prices.
Chinese steel mills are not restocking iron ore as they are facing deeper losses from continuous decline in global iron ore prices as well as suffering from extreme tightness in liquidity.
Iron ore inventories in China have increased as compared to last month. On 27 Nov’15, inventory at major Chinese ports was recorded at 90.0 MnT, which was highest since May’15.
Falling steel demand in China has forced mills to cut output, but mills haven’t cut output quickly enough; in turn dampening steel prices.
Prices of spot billet, a semi finish product, have slumped to around RMB 1,500/MT. Sharp fall in billet prices has worried small steel mills, which may forced to shutdown permanently.
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