It was late February 2016 when Iron Ore prices started a roaring bearish trend from a ten-month high around $93. A price drop in April led iron ore to $63, which is the lowest level since November 2016.
There is one common reason for blaming iron ore price collapse, that is " Huge Over Supply Overwhelms Demand."
One of the most important factors for weakening demand , is a slowdown in the Chinese car sector, which has hit steel demand and prices in the country. The demand drop led market and companies to use stockpiled iron which is cheaper than high-grade produced iron.
Due to this lack of demand , a rapid rise in Chinese iron ore inventories happened. Iron ore stockpiles at ports of China rose from 80.5 million tonnes in October 2015 to 132.5 million tonnes next March. But the Chinese government still insisted on importing iron which has sub-dued to previous issues forcing Chinese mills to use some of the stockpiles. Chinese iron imports hit a record above 1 billion tonnes in 2016 experiencing a 7.5% rise compared to the previous year.
But it seems demand dynamics revive in the following months, which can hold iron ore prices above $60 due to decreasing in iron stockpiles at Chinese ports and increasing demands of Chinese industries.
