The market of iron ore seems to be turning downward and most of the traders are taking out the conclusion that the iron ore market is really going down due to fall in the steel prices in global market.
The new that Brazil miners sold iron ore to China for much lower prices than the latest current prices also supported the price fall. But in reality, the market is on its higher side in the starting of this year because the Chinese Government issue package of 4 trillion Yuan (US$ 613bn) for the period of 2 years.
Most of the mining giants in Brazil are using their own price index for supplying iron ore to China. This helps them to improve their own market shares by taking the advantage of market price.
Most of the Brazilian miners are interested in increasing their sales of iron ore to China by locating their distributors in Asia. The distance between Brazil and China also playa import role in price flexibility.
Besides falling demand on steel in global market, the mining giants are negotiating the prices to increase their sales and improve their market shares.
If one checks the pricing of iron ore, it’s still on the higher side comparing last twenty months. The other reason could be the mood of the commodity traders.
It is expected that the prices of Iron Ore may see the lowest of US$ 130 by the end of this year. This is pure prediction as more supportive factors are still present in the market which states the price may go up.
The rising trend in the commodity market will soon resume if the European crisis doesn’t goes out of control and China doesn’t takes any hash step in importing iron ore.
The China economy is expecting growth rate of around 7 percent annually as per their 12th five year plan and the steel industry in China is big and the direct source for Governments income and employment. The Hunger for resources by the Asia’s Giant is not temporary and it will drive the demand of minerals and energy on long term basis.
Most of the investors backed off due to economical crisis which resulted as fall in the production of key commodities like iron ore, metallurgical coal and copper.