Spot iron ore hit a new decade low as the glut-hit market for the steelmaking ingredient continued to struggle with poor demand from top consumer China, where Shanghai steel rebar prices sank to a record low.
Stocks of iron ore at China’s ports climbed to 87.65 million tonnes on November 27, the highest since May, data from SteelHome showed. The port inventory has risen more than 10 per cent since June, reflecting slow demand from Chinese steel producers, many of whom have curbed production as falling industrial demand widens their losses.
Top global iron ore miner Vale said earlier it expected to produce between 340 million and 350 million tonnes of iron ore in 2016. That compares with guidance of 376 million tons given in December. Vale was expected to forecast 344 million tons, according to the average of three analyst estimates compiled by Bloomberg.
The miner is set to expand as its giant S11D project starts next year. It expects output to reach 380 million to 400 million tons in 2017 and as much as 450 million tons by 2019. Last year, it anticipated surpassing the 450 million mark by 2018. The S11D mining project was 77 per cent complete as of October.
“Iron ore remains an oversupplied market where production costs are coming down, there’s hardly anything that can stop prices from falling further,” said Julius Baer analyst Carsten Menke.
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