Iron ore hits lowest price since early February

Iron ore continued its recent downwards trajectory Monday, with the spot price for benchmark 62% fines shedding a further $3.49 per tonne and taking seaborne down to its lowest level since early February.

Prices have lost $9.92 a tonne since last Monday, according to data provided by the Metal Bulletin, closely resembling the situation affecting Chinese iron ore futures.

The most actively traded September 2017 contract on the Dalian Commodities Exchange had slumped earlier 5.26% to 549.5 yuan a tonne, hitting a low of 541 yuan earlier in the session. That’s about double the losses seen overnight Friday.

“Market participants are mostly expecting prices to fall further amid weak demand and high inventory levels,” the analysts at the Metal Bulletin wrote Monday.

Some believe the current drop in prices have its roots in mounting inventory at Chinese ports, currently sitting at the highest levels since 2004, the FT.com reports citing Shanghai Steelhome data.

Others, blame an ongoing glut that has worsened due to that fresh supply coming from recently opened mines, for the weaker prices.

Yet there are some, such as Stan Wholley, president for the Americas at CSA Global, and who has vast experience in the iron ore market, who believe it’s too early to say the current downward trend is the beginning of a new slump.

“If we go back nine or eight months, iron ore was in the $40s and everyone was saying there was no reason to see a recovery, and that it would probably stay in the range of $40 to $60 for the next two to three years,” Wholley told MINING.com. “Those pundits were shown to be very wrong (…) If you look at current prices in context, you’ll see all of the majors are making incredibly good margins at the moment and even small or mid-tier iron producers are making money at current prices.”

The consultant, with more than 25 years of experience in exploration and mining geology, particularly in the iron ore sector, said he didn’t believe prices would return to the highs hit between 2008 and 2012, but he added that as far as they hover in the $60-$90 range, it’d be enough for most producers to keep their business not just going, but doing well.