Global iron ore prices are assessed at USD 50.2/MT, CFR China on 24 May’16. Prices at such level were last seen on 01 Mar’16.The major reason behind fall in iron ore prices is increasing port inventories.
Despite there was a drop in iron ore prices, some trading activity still seen in the steel market today. Steel sentiments improved somewhat as mills delivered more steel products to the market. Chinese billet price in Tangshan region rose RMB 10/MT (USD 2/MT) to RMB 1,880/MT (USD 287/MT) which lent some strength to the iron ore market.
In Apr’16, iron ore prices touched to a level of around USD 69/MT due to speculative trading. But after reaching at USD 69/MT a month ago, prices have retreated.
Stockpiles at major Chinese ports have climbed above 100 MnT, last seen in Dec’14 at such levels. Inventories rose from 99 MnT in Week 20 to 102 MnT in Week 21. Chinese steel mills with sufficient raw material stockpiled are currently cutting down procurement while those with low inventory levels are stepping up their purchases amid low prices. But many Chinese steelmakers are just buying for their immediate requirements.
Iron ore prices have roller coaster ride starting this year. In China, traders piled up raw material in March and April, helping to boost prices. Inventories at ports have climbed above 100 MnT, offering increased supplies from Australia and Brazil. In addition, BHP Billiton forecast last week that there may be further increases.
One of the market participants mentioned, “ Chinese iron ore buyers want to buy small volumes of iron ore at the ports rather than a large 170,000 MT cargo since they do not want to lose out in the case of prices fall further”.
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