Iron ore sank, adding to signs the record leap at the start of the week wasn’t justified given the global market’s poor fundamentals, with banks and even miners lining up to say the spurt was destined to fade.
Ore with 62 percent content delivered to Qingdao retreated 1.4 percent to $57.09 a dry metric ton, according to Metal Bulletin Ltd. The price has declined every day after Monday’s 19 percent rally to $63.74, the biggest gain in daily data going back to 2009.
Friday’s drop was foreshadowed by losses in futures in Singapore, which fell near $50. “The insane rise at the start of the week was irrational and is unlikely to continue,” Huang Huiwen, an analyst at Shanghai Cifco Futures Co, said before the Metal Bulletin data was released. “Usually after a period of abrupt gains, prices tend to drop back quite sharply. I think we’ll see that in iron ore.”
Iron ore has advanced in 2016, surprising many forecasters who’d expected a fourth year of losses driven by a global glut and slowing demand for steel in China, the largest user.
Prices had surged on Monday after bullish comments on growth from China’s leadership, spurring speculation that some investors had been forced to rush to reverse bets on losses. After the jump, Goldman Sachs Group Inc. and Citigroup Inc. reiterated bearish forecasts, and producer BC Iron Ltd. said that it expected a retracement.
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