SYDNEY/SHANGHAI, July 3 (Reuters) – Iron ore prices dropped to the lowest in more than two months on Friday, sending shivers through the mining industry and heightening worries that Chinese economic activity is slowing just as ore piles up at its ports.
China uses more than a billion tonnes of iron ore a year to make steel – 14 times the consumption of the United States – but Beijing’s efforts to shift the economy to consumer-led growth means steel consumption is peaking faster than expected.
“It’s clear China can no longer consume all the iron ore that’s out there, so something’s got to give,” said James Wilson, a sector analyst for Morgans Financial in Perth.
Shares in Australia’s biggest mining houses, including Rio Tinto , BHP Billiton and Fortescue Metals Group led the Australian bourse lower after the price of the raw material fell by 5 percent.
Iron ore delivered to China .IO62-CNI=SI stood at $55.80 a tonne, its weakest since late April, Reuters data showed. The most traded iron ore futures on the Dalian Commodity Exchange followed, slumping to the lowest since April 24 of 402.5 yuan ($64.86) a tonne.
Analysts interpreted the declines as further evidence that China was awash in too much iron ore – with more on its way.
Iron ore stocks at 42 Chinese ports rose 1.7 percent to 81.97 million tonnes by Friday from a week before, data from industry consultancy Umetal showed.
Even as stockpiles grow, fresh cargoes of ore continue to arrive, mostly from Australia and Brazil.
For the rest of this article, click here: http://www.reuters.com/article/2015/07/03/markets-ironore-china-idUSL3N0ZJ2HZ20150703