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The spot price of iron ore plunged again on Wednesday for a weekly loss of more than 10% and deeper into uncharted territory as negative sentiment swamps the industry.
The steelmaking raw material has declined to the lowest since the inception of the spot pricing system. The 62% Fe import price including freight and insurance at the Chinese port of Tianjin lost $2.00 or 3.9% to $49.00 a tonne on wednesday.
There is little prospects of an upturn.
In a note on Wednesday Australia’s ANZ Bank commented that “mills and traders remain sidelined as threats of environmental inspections and speculation that as much as 40 percent of steel mill capacity is pegged for closure keeps the outlook negative.”
Platts News reports smaller Chinese mills unable to afford equipment upgrades are being forced to cut down or cease production as Beijing cracks down on its most polluting industries.
Steel consumption in China which imports more than 70% of the world’s iron ore fell last year for the first time since 1995 and the slowdown has coincided with a flood of new supply.
On Thursday rebar futures on the Shanghai Futures Exchange hit a session low of 2,381 yuan ($384) a tonne, the lowest level since the launch of the contract in 2009.
Chinese domestic iron ore prices suffered the same fate with Dalian Commodity Exchanged contracts first launched in October 2013 hitting a record low of 390 yuan or around $62 a tonne.
After giving up 47% in 2014, the price of iron ore is now down nearly 30% this year.
Wednesday’s peg was the lowest price since November 2008 when The SteelIndex first started tracking the spot price.
In 2008, the benchmark contract price was $60.80 a tonne, which was hiked from the annually-set price in 2007 of $36.63.
SEE ALSO: Iron ore market rebalancing won’t go smoothly
New report says large surplus this year and next will push prices to $45 a tonne by end-2014.
4 Comments
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How can there be “little prospects of an upturn” if “40 percent of steel mill capacity is pegged for closure”? Will it not put upward pressure on iron ore prices?
James Bond
Less steel being made less demand for Iron ore I suppose. But I am not an economist. Its a race to the bottom for the big 3.
rayban
Cure for low prices is low prices . I am buying stock at the bottom some of any or all of the lowest AISC companies . Help their stock price , make some money , win some risk bet and move up .
Altaf
Different angles for different groups.
Take the case of Producers : All these years Producers jacked up prices when China desperately needed the raw material from the levels of 30 dollars per MT to upwards of 100. With the Commodity cycle turning the other way, its the time of consumers to take advantage.
Take the case of China : Just check figures 10 years back. China imported may be 100 million tons @ 40-50 dollars/ton. Last year they were paying 125 dollars per ton for a billion tons of raw material silently. They did not cry when producers are jacking up the prices. They silently took the hit. Now is the turn of producers to take hit silently. One man’s loss is another man’s gain.
A new Angle, the case of India : India stopped exporting when prices reached all time highs, missing the cream. After a lot of scandals and mine stoppages, they are now taking advantage of low international prices and from zero two years back, they imported 15 million tons last year at lowest prices.