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With a new supply of iron ore from Australia and Brazil arriving, iron ore prices have started to be droped from $143 / ton in August to $132 / ton.Citigroup predicted that in the fourth quarter, BHP Billiton,Fortescue metal group and Rio Tinto will produce 34 million tons,far higher than it was last year due to the on-line production of expansion project.
"De-stocking period in China has ended while growing a large number of new iron ore supply will bring pressures to the iron ore price." said Credit Suisse Global Commodity Manager Ric Deverell.In addition, the future price pressure of iron ore also suffers from the influence of China steel mills and India,especially India which is possible to implement easy mining regulations and relax the export ban,which will cause more iron ore supplies to flow over into the market.For China, as the world's largest steel producer still has strong demand, as is a key factor for driving the iron ore price.
"In July and August of this year, the inventory of China iron ores increased by nearly 13 million tons, which directly led the iron ore prices to rebound 20% from $110 / ton at the lowest point in May. China's steel output in May hit the highest yield 8 tons, and now maintain between 760 to 800 million tons." deemed Christopher LeFeminaBut Christopher LeFemina considered that a weak in China steel pipe prices seriously affected corporate profits and China steelmaking plant would perhaps start to reduce the current iron ore inventory. He said "Steel mills were estimated to hold two months of the supply of iron ores; we will probably see some mild inventory adjustment appearing. "
Citibank also said "Strong China steel production and iron ore imports has shown weakness in recent months. Excess steels have been poured into the international market. Considering that a slackin Chinese demand and the beginning of dear money policy, iron ore prices were expected to be droping to $110 / ton in the fourth quarter. "
At the same time,iron ore producers including Rio are expanding their production lines. Australia was expected to increase the new production capacity of about 140 million tons in the next two years.Its iron-ore exports also somewhat picked up because Brazil solved the problems of infrastructure.Credit Suisse Global Commodity Manager Ric Deverell commented on it "The iron ore market was entering a real situation of oversupply, and at some stage, the iron ore price would be reduced to $100 or $90 / ton in the next few years, which can force the supply surplus to be eased. "