Global iron ore fines prices (Fe 62% ) have dipped to around USD 37.5/MT, CFR China on 10 Dec’15. Prices are now in a downturn movement and declining day-by-day. Shanghai rebar has also been recorded at an all time low.
Iron ore prices in China have dropped to be weakest amid expectation that further fall in steel consumption could shut down more steel mills, thus declining iron ore demand.
The whole iron ore market in China has been surrounded by bearish sentiments. There is no sign of improvement in demand. In addition, more steel mills are likely to cut down their production in next few months.
Some steel mills have either reduced output or completely shutdown mills due to shrinking steel consumption amid slower economic growth.
Iron ore inventories are reported at 91.1 MnT (as on 4 Dec’15), which is the highest level since May’15.
On the other hand, China’s steel exports contributed to be 100 MnT in the 1st eleven months of 2015 as steel producers shipped more steel products to overseas market. If China’s steel export growth slows down due to lack of trade, a glut of steel in China can harm domestic steel prices to move down further.
Roy Hill all set to make its first shipment
Australia’s Gina Rinehart’s Roy Hill project is all set to make its first shipment. The first shipment from Roy Hill is jointly owned by Hancock Prospecting, Japan’s Marubeni and China Steel Corporation was loaded this week to Posco steel mills in South Korea.
Roy Hill, which will add annual capacity of 55 MnT of high grade iron ore to the existence capacity, has long term contracts with steel mills in Asia including Japan for supplying 90% of production. Roy Hill shipment will surely pressurize iron ore prices to drop down further in coming term.
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