b'1.6 The ups and downsof iron ore pricesIron ore prices may have retreated in re-cent weeks from their earlier heights but are still up an impressive 67% on the year. ThePeter Buxbaum, AJOTThis article was originally published on highof$126.35ametricton,reachedinJuly 22, 2019 in issue #691early July, was the highest level seen since January 2014.Thesurgeinironorepriceshasbeen linked to compromised supplies from mines in Australia and Brazil. Brazils Vale SA, one oftheindustrystopexporters,cutoutput following a fatal dam collapse in January. In Australia, weather and fire damage have set back operations in that countrys mines. and two in the United States. Meanwhile, the iron ore producers, which have imple- [image 1.6]Increased iron ore prices have caused painChinas iron ore imports in June fell to their mentedefficienciesinrecentyears,havelowest levels since February 2016 and iron for steel producers in China and elsewhereseen their profit margins spike, thanks to theore inventories are shrinking.and the supply disruptions, presumably oc- higher prices and lower expenses.curring in the normal course of business and notasaresultofmanipulation,havenotThere is a wild card in this picture, on the preventedChinesesteelmakersfromcom- demand side, having to do with steel out-plaining to their government to intervene input limits in China aimed at curbing pollu-themarket. ThethreatofChinesegovern- tion. Wuan imposed output restrictions on ment action caused the recent fall in iron14 steelmakers through August 31 and the ore prices, according to some observers, butcityisnowconsideringfurthermeasures. producers should not count on falling pricesTangshan is scheduled to lift its restrictions developing into a trend. on August 1, but some observers speculate that the city will impose more stringent re-The China Iron Steel Association (CISA) re- strictions beginning in September. But those leased information confirming that its mem- developments, which could reduce the de-bershadrequestedagovernmentinvesti- mand outlook for steel and, by extension, gation into the price hikes and that, in fact,for iron ore, in the immediate term, will not the Chinese government was doing just that.likely change the Chinese steel industry pic-According to CISA, Chinas steelmakers sawture in the long run.profits fall 18.2% in the first five months of this year and their profit margins sink to fiveIron ore prices may have fallen of late, but percent. Chinese steelmakers, led by Baowuindustry experts warn against premature cel-Steel, are also taking action by setting up aebration. Chinas iron ore imports in June fell working group to find ways to mitigate soar- to their lowest levels since February 2016ing iron ore prices. downover10%fromMayandironore inventoriesatChinasportsareshrinking. Steelmakers worldwide have reported thatStockpiles stood at 115 million tons at the their margins are being squeezed by climb- end of June, down 18% on the year, leaving ing iron ore costs, with U.S. Steel reportingChinas steel producers with only about four in June that it closed one furnace in Europeweeks of supply on hand. 2019 Collection Breakbulk Shipping 15'