From the end of 2012 to the beginning of 2013, iron ore price surged in short time. Report released by National Development and Reform Commission (NDRC) on March 6 said that iron ore price jumped up mainly because short-term supply-demand relationship changed in iron ore market together with market hype and unreasonable pricing model.

Enterprises supplemented iron ore inventory. In 2012, steel companies adopted low inventory strategy, which caused the port stock declining to 74 million tons from 100 million tons. However, they picked up confidence towards economic situation in 2013, enlarging purchasing amount.

The rainy season comes in the South Hemisphere, affecting expected supply. Australia suffered tropical cyclone in January 10-12, 2013. Hedland Port and Dampier Port, two main iron ore ports, were closed at that time.

Iron ore price was pulled up artificially. As the recovery of iron ore prices, owners of the top 3 mine and part traders delayed shipment, controlled amount as well as reluctance to sell their products to make up prior loss, leading to false scent of transient short supply in iron ore market.

Pricing mechanism is unreasonable. Main mines abroad signed ration but no pricing long-term contact with Chinese steel companies while conducting bidding trading. The bidding process is unclear, so that the iron ore price has been pulled up.

Source from CNSS