Seaborne iron ore prices in China slumped below $70/tonne on Friday for the first time since 15 December. News of potential output restrictions in northern China are dragging down iron ore more than they are supporting steel prices. The fall in iron ore prices came as the market continued last week to witness increasing uncertainty due to the official signing by US President Donald Trump of the import tariffs affecting steel and aluminium.

A rally has taken the iron ore price above $78/t cfr Qingdao, having jumped some $20/t since end of October 2017. Last week the market turned significantly as it became clear that iron ore in China would not receive any support from steel prices in the immediate future.

Following the correction of iron ore prices, the market is now trading at almost $20/t below the levels registered at the beginning of March 2017. In 2017 the market reached its peak at the end of February before starting a steep fall that continued until mid-June, taking the price from above $90/t cfr Qingdao to some $55/t.

The iron ore price correction in China last week did not impact other raw material prices directly. On the contrary, scrap reached a new three-and-a-half year record high last week and billet prices also increased. Nevertheless it is expected that if the weakness in the iron ore market persists, it will force scrap and billet prices to slow down globally also. Market observers, for example, noted that the billet market bubble could well burst sooner rather than later.