SINGAPORE, Sept 6: Spot iron ore prices hit their lowest in nearly three years, extending a market rout that began in July and likely to continue as weak steel demand drove Shanghai steel futures further in the red on Thursday.
Iron ore prices have dropped 36 percent since early July, the hardest hit among industrial commodities by a slowdown in top buyer China whose economy is predicted to grow this year at its weakest pace in a decade.
Benchmark iron ore with 62 percent iron content slipped 0.2 percent to $86.70 a tonne on Wednesday, according to data provider Steel Index.
That is the lowest price for the steelmaking raw material since October 2009, which is now less than half the 2011 peak of $191.90.
The most-traded rebar contract for January delivery on the Shanghai Futures Exchange hit a session low of 3,206 yuan a tonne on Thursday, a level unseen since the bourse launched rebar futures in 2009.
Rebar, or reinforcing steel bar used in construction, has fallen more than a quarter from this year’s peak. Iron ore has slid 42 percent from its highest level this year.
‘Unless steel demand picks up, iron ore has room to head down further. Both spot and futures steel prices are falling quite fast, there’s no way for iron ore to go but down still,’ said a Shanghai-based iron ore trader.
The price of spot steel billet in China’s key Tangshan area has fallen by 120 yuan, or about $19, to 2,730 yuan per tonne, over the past three days, traders said.
Another trader in Shanghai said his company is selling iron ore cargoes from its port stockpiles at $15-$20 per tonne less than the purchase price.
‘And these are very small volumes, maximum is 5,000 tonnes. It’s quite difficult to find customers who can buy 10,000 tonnes. They will ask for more discount if they take that volume,’ he said.
Rio Tinto , the world’s No. 2 iron ore miner, sold 61-percent grade Australian Pilbara iron ore fines at $88.8 per tonne on Wednesday, down from $91.39 on Monday, traders said.
Rio is selling another 130,000 tonnes of Pilbara fines at a tender closing on Thursday, and traders say the price could slip further to $85-$86.
Top miner Vale sold 64.55-percent grade Brazilian Carajas fines at $95.01 on Wednesday, down from $101.78 last week for a similar grade.
(agencies)
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