Iron ore declined to the lowest level in more than five years as China ordered some steel mills to reduce production, curbing demand in the world’s biggest user just as increased supplies exacerbate a global surplus.
Ore with 62 percent content delivered to Qingdao fell 2 percent to $76.46 a dry metric ton today, the lowest price since September 2009, according to data from Metal Bulletin Ltd. The drop extends two weeks of losses at the end of October.
The raw material lost 43 percent this year, underperforming all 22 members of the Bloomberg Commodity Index, as producers including BHP Billiton Ltd. expanded supplies and spurred the glut. Some mills in the largest buyer were ordered to suspend output before a summit of world leaders at the Asia Pacific Economic Cooperation forum in Beijing. A recovery in prices may take as long as 18 months, according to Anglo American Plc.
“Steel mills in north China should be working at a reduced rate due to the APEC meeting,” Christian Lelong, an analyst at Goldman Sachs Group Inc. in Sydney, said today before the price was released. “That should be playing a role” in iron ore’s drop, he said by e-mail.
Asia’s biggest economy will host the APEC gathering in the capital from Nov. 7-12, prompting authorities to order factory shutdowns to try to ensure clean air during the event. The provinces of Hebei, the country’s biggest steel-producing region that surrounds the capital, and Shandong, the third-largest, will bear the brunt of the losses.
Seaborne Glut
Iron ore shipped from Australia’s Port Hedland, the world’s biggest bulk-export terminal, climbed to a record 37.5 million tons last month from 36.3 million in September and 28.9 million in October 2013, according to port authority data yesterday. Exports to China were 31.7 million tons in October, near the record 32 million tons in August and 26 percent up on year.
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