Iron Ore Hits the Skids as Miners, Banks Wrangle Over Supply – by Jasmine Ng (Bloomberg News – September 15, 2016)

After a stellar run in 2016, iron ore has hit a rough patch. The prospect of a slump below $50 a metric ton is now back in view after the longest losing streak in more than five months as investors, analysts and miners spar over the impact of additional low-cost supply.

The raw material with 62 percent content delivered to Qingdao lost 5.8 percent in the seven sessions through Wednesday, according to Metal Bulletin Ltd. That was the longest run of daily declines since March, and pegged back this year’s gain to 28 percent from as much as 62 percent in April. On Thursday, the price was unchanged at $55.97.

Iron ore has retreated in September, rekindling speculation that rising supply from mine ramp-ups and new projects may soon drag prices lower.

While miners Vale SA and Cliffs Natural Resources Inc. contend that the impact of the new output won’t be severe as expected and see the $50 level holding, Citigroup Inc. and Westpac Banking Corp. have said that additional production will probably contribute to weaker prices.

“Prices appear to be responding to the potential for increased supply as we move into the fourth quarter,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “The risk looks to be to the downside now. It’s certainly possible we could see prices below $50 from here.”

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