Global iron ore prices are assessed at USD 41.3/MT CFR China on 27 Jan’16. Currently, prices are at 4-months high. However, this increase is temporary as outlook for iron ore still remains gloomy due to supply glut by Australia and Brazil.
One more reason behind pick up in prices is suspension of Tubarao port operations
of Brazil’s Vale SA, the world’s largest iron ore exporter by court on pollution concerns. However, the company may re-open its Tubarao port soon. The port handles around 300 MnT of annual iron ore exports from Brazil.
Chinese steel mills are running at low operational costs due to cash crunch. But, due to Lunar New Year Holidays coming next month, mills are under shortage of raw materials, restocking their low inventories, which will encourage mills to resume production.
Meanwhile, steel demand is also expected to improve in China which will boost prices as well. Iron ore prices are also dented on expectations that China’s demand will be slow this year on account of rising global supplies from major iron ore producers which pressurized iron ore prices.
Talking about steel production, China’s world top most steel producer and exporter have recently announced a production cut of 100-150 MnT pa in annual production inorder to save country from harmful pollution caused. So, as in, this production cut will definitely impact iron ore prices in the coming term.
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