Iron Ore Slides to Seven-Month Low as Trade War Fears Mount – by Krystal Chia (Bloomberg News – July 5, 2018)

Iron ore’s starting to buckle after a series of warnings that prices are set to drop amid rising global supply, and as investors fret about the potential impact of escalating trade tensions between the U.S. and China.

Benchmark spot ore eased to $62.50 a ton on Thursday, the lowest since November, according to Mysteel. In Singapore, SGX AsiaClear futures sank as much as 1.5 percent to $62.88 a ton, the cheapest since April 9, while the contract on the Dalian Commodity Exchange fell almost 4 percent this week.

Since retreating into a bear market in March, iron ore has held in a narrow range in the mid-$60s as investors weigh robust steel production in top user China against prospects for increased mine supply.

This week, Australia, the world’s largest shipper, forecast that prices will fall back into the $50s as output expands while China begins to reduce purchases. Lower prices reduce income for top miners Rio Tinto, BHP Billiton and Vale.

The “macro environment has been a providing a key drag on sentiment with the looming trade tariffs,” said Hui Heng Tan, a research analyst at Marex Spectron. That, coupled with both a period of lower demand and supply increases, means there’s “a perfect storm in the making,” Tan said.

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