Iron ore is on the cusp of dropping into the $30s a metric ton as the biggest producers expand supply and the onset of winter in China dulls demand that’s been hurt by the slowdown in growth in the world’s top user. Miners’ shares retreated.
“The outlook remains grim for iron ore fines because end-demand from construction and manufacturing is uncertain,” said Jessica Fung, an analyst at BMO Capital Markets in Toronto. “Steel inventories have been building.”
Spot ore with 62 percent content delivered to Qingdao fell 0.9 percent to $40.75 a dry ton on Thursday, a record low in daily prices compiled by Metal Bulletin Ltd. dating back to 2009. It’s dropped each day this week, losing 8.4 percent.
The raw material traded as low as $10.51 in 1988, when annual benchmark contracts were negotiated between the largest miners and steel producers, according to data from the International Monetary Fund.
The commodity sank this year as the slowdown in China hurt demand while the top suppliers including BHP Billiton Ltd. and Rio Tinto Group in Australia and Brazil’s Vale SA boosted low-cost output.
More seaborne supply is due to commence next week as billionaire Gina Rinehart’s Roy Hill mine ships its inaugural cargo from Australia’s Port Hedland.
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