Iron ore capped the biggest weekly decline in more than five months amid expanding global surplus, with Vale SA’s opening of a port in Malaysia highlighting rising supplies and investments by the world’s largest shippers.
Ore with 62 percent content delivered to Qingdao lost 4.7 percent this week to $75.84 a dry metric ton, according to data from Metal Bulletin Ltd. The decline completed three weeks of losses, deepening a bear market. Prices, which rose 0.6 percent today to snap a five-day losing streak, reached $75.38 yesterday, the lowest since September 2009.
The raw material lost 44 percent this year as producers including Brazil’s Vale, the world’s largest shipper, and BHP Billiton Ltd. and Rio Tinto Group (RIO) in Australia expanded supplies and spurred the glut. Data this week showed record exports of the steel-making raw material from Australia’s Port Hedland last month. Mill closures ordered by China this week to curb air pollution for a global summit were also seen hurting demand.
“Demand in China is weak because some mills were asked to stop production before the APEC meeting,” Ben Cheung, head of metals at ABN Amro Group NV in Hong Kong, said before the price data was released. “The major producers are still expanding supply to try to increase market share. The over-supply situation doesn’t look like it will be alleviated next year.”
The seaborne market needs to absorb a surplus of about 110 million tons next year from 60 million tons in 2014, Goldman Sachs Group Inc. said in an Oct. 23 report. Global output will exceed demand by 100 million tons this year from 16 million tons in 2013, HSBC Holdings Plc said in an Oct. 22 report.
Vale’s Outlook
Vale, which is seeking to boost output by 50 percent, today inaugurated the $1.4 billion port in Malaysia, where its Valemax vessels will unload cargoes for onward shipping to clients in Asia in smaller vessels.
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