China’s steel demand shifts to higher-grade ore, Rio Tinto exec says
"The demand for high grade ore continues to be strong," chief commercial officer Bold Baatar said.
Even though at the beginning of the month iron ore was trading above $120 a tonne, the highest in more than five years, prices are starting to come down a bit, closing at about $100 a tone in the last market session.
Prices are being affected by a pick-up in supply aided by Brazil’s Vale (NYSE
However, futures are the hardest hit by the current state of affairs. According to Bloomberg, futures in Singapore fell as much as 8.6% to $94.32 a tonne, with ore for September closing around 7.3% lower at $95.63 a tonne. Benchmark spot material dropped to $99.50 a tonne on Monday.
Also, last week, the most-traded iron ore on the Dalian Commodity Exchange, with January 2020 expiry, slumped 4.2% to 724.50 yuan or $102.76 a tonne, the sharpest one-day fall since July 5.
“Miners’ shares retreated, with markets focused on the consequences of China allowing the yuan to weaken to the lowest in more than a decade,” Bloomberg’s analysis reads. The Chinese currency sunk beyond 7 per dollar for the first time since 2008.
Experts quoted by the media outlet say that the situation with the yuan paired with uncertainty around the Washington-Beijing trade relations spurs concerns about economic growth and has had an impact on investors’ interest in raw materials.
Fortescue (ASX
Manufacturing has also started to slow down, with key markets such as Germany dropping its crude steel output by 5.8% y-o-y, Turkey by 11% y-o-y, France by 3.4% y-o-y, and Brazil’s by 3.1%.
