Iron ore (8)
Trucks drive inside an iron ore dump site at the Huanggang Terminal of Qingdao Port, in Qingdao, Shandong province, June 7, 2014. Reuters/Fayen Wong

Iron ore spot markets slumped yet again on Friday. As noted by Metal Bulletin, the spot price for benchmark 62 percent fines dropped by a margin of 1.7 percent to reach US$80.39 (AU$105.26) a dry tonne. This is the lowest price recorded since Jan. 10.

The loss for the last week of March amounted to 5.5 percent. With this, the total decline for the entire month reached 11.9 percent. With regard to year-on-end, there has been an increase of 1.92 percent. In contrast, the same number had reached as high as in excess of 20 percent at one point in February. Concerning lower grade ores, the spot price for 58 percent fines declined by 1.13 percent to settle at US $55.21 (AU$72.29) a dry tonne.

The most recent declines come as imported iron ore inventories at 46 ports in China have reached 132.5 million tonnes, as reported by Reuters. This has been the highest recorded level since data started publishing in 2004. Over the first two months of the year, the Chinese domestic production of iron ore has escalated by 15.3 percent.

Subsequent declines in prices could lead to the shuttering of Chinese capacity. As a result, the country could become more dependent on mining giants and exporters like Vale, Rio Tinto and BHP Billiton.

According to SteelHome analysts, the volume of iron ore kept at the ports could build as many as 13,000 Eiffel Towers, according to the Reuters report. This is exclusive of an additional 40 million tonnes at the steel mills. Port authorities have reportedly been asking vessels carrying lower grade ore to turn away. According to China Iron and Steel Association vice-chairman Li Xinchuang, the increasing stockpiles "will be very dangerous for the price.”

Metal Bulletin commented on the trend in iron ore spot markets seen last month. “March has proven to be a turbulent month for the iron ore market,” Metal Bulletin analysts said. “Despite stubbornly resisting pressure for large periods of the month, over the past week recent support has given way to mounting pressure.”

The decline in prices came as there was renewed weakness in rebar futures as a long weekend in China, for the Tomb-sweeping festival, approached. “Buyers suspended procurement again as the futures market started to trend downwards,” the group said. “Furthermore, with the country on holiday on Monday and Tuesday for the Tomb-Sweeping Festival, it is anyone’s guess how prices will trend next week.”