Spot prices for iron ore fines crossed $50 per ton in China (CFR) on July 7, having declined 24% since mid-June to $49.6, Concorde Capital informed clients in an online advisory.

The plunge in prices is the result of the first increase in iron ore stockpiles in Chinese ports since the beginning of 2015, from 74 million tons to 76 million tons, which occurred during the first week of July. The key global consumer of iron ore, the Chinese steel industry, has slowed its output as production in the country’s biggest steelmaking province decreased by 2.4% YoY in May to 16.1 million tons.

Concorde analyst Roman Topolyuk added: “The bounce in iron ore prices, which had lasted since April, proved to be short-lived. The slide to new lows is a negative development for Metinvest and Ferrexpo, which might face a further squeeze of their margins in the second half of the year. Ferrexpo reported an adjusted EBITDA margin of 30% in 2014, and we project around 20% in 2015. Metinvest’s mining division reported an EBITDA margin of 38% in 2014, while we project around 20% in 2015, as part of the iron ore concentrate capacities of Metinvest might be merely breaking even, at the current levels of fines prices”. (https://www.ukrainebusiness.com.ua/news/15553.html/Ukrainian metal)

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