Iron ore has been dragged back into the $60s after getting hit by a barrage of bad news, with persistent concern about rising global supply, fresh questions about the outlook for demand in China, and a warning from Australia’s central bank that the top buyer may be nearing peak steel.
The benchmark spot price for ore delivered to Qingdao slumped 10 percent in the past four days, ending at $68.85 a dry metric ton on Tuesday, the lowest since July, according to Metal Bulletin Ltd. The sell-off in the commodity, which hit almost $80 in August, took a breather on Wednesday as prices rebounded but remained below the $70 threshold.
“As we get into the fourth quarter, we see demand in China pulling back, demand for steel pulling back,” Paul Butterworth, research manager for steel raw materials at CRU International Ltd., said in an interview in Singapore. “It’s quite likely the steel mills will say ‘well, we’ve got sufficient material on hand at the moment, so we can withdraw from the market for now’.”
Iron ore is coming under pressure as weakening data from China have undermined the outlook for the coming months at the same time as the top steelmaker plans output cuts over winter to ease pollution.
On Tuesday, Australia’s central bank said prices will drop amid rising supply and prospects that steel output in China is nearing a peak on a per-head basis. The mainland is the world’s leading ore importer, taking cargoes from mining giants Rio Tinto Group, BHP Billiton Ltd., Fortescue Metals Group Ltd. and Vale SA.
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