Friday, 20 March 2015 13:02
SINGAPORE: Iron ore held at a record low and was on course to extend its losing run to a fourth consecutive week amid a glut and weak buying interest from top importer China.
Sliding prices have forced smaller producers out of the market and made it tougher for bigger miners to seek funding. This week, Australia’s Fortescue Metals Group scrapped a $ 2.5 billion debt issue as investors balked at the offer.
“Iron ore is finding no reprieve as buying interest among steel mills and traders remains weak,” ANZ Bank said in a note.
Iron ore for immediate delivery to China’s Tianjin port was unchanged at $ 54.50 a tonne on Thursday, according to The Steel Index (TSI). This is the lowest level since October 2008, when TSI began tracking the benchmark spot price.
The steelmaking commodity has dropped 6.2 percent for the week so far. Iron ore has fallen a further 23 percent since the beginning of January after losing 47 percent last year.
Daily crude steel output of China’s large steel producers declined 5 percent to an average 1.682 million tonnes in the first 10 days of March from the preceding eight-day period, data from the China Iron and Steel Association showed on Wednesday.
Weaker demand and tougher environmental scrutiny have prompted some mills to curb production, and analysts predict demand growth is likely to slow further.
“Steel demand growth rates are slowing fast and over the next five years China is expected to add only 180 million tonnes to its steel demand compared with an extra 290 million tonnes over the past five years,” Barclays said in a report.
Rapid growth in China’s automotive sector would only partially offset a decline in infrastructure spending and construction activity, Barclays said.
China’s steel demand shrank in 2014 for the first time in three decades as a slowing economy hit industrial demand. This year the world’s No. 2 economy is targeting growth of around 7 percent, the slowest in a quarter of a century.
Copyright Reuters, 2015
