Friday, 27 March 2015 10:25
SINGAPORE: Iron ore futures in China and Singapore slid about 4 percent on Friday, pressured by worries global producers would continue to lift supply in a glut-hit market.
Iron ore prices on China’s Dalian Commodity Exchange hit the daily floor set by the bourse, touching a new all-time low and creating further downside risk for spot prices that this week fell to the lowest since records began in 2008.
The head of Rio Tinto , the world’s second-largest iron ore miner, on Thursday dismissed as “harebrained” a suggestion by smaller rival Fortescue Metals Group that miners should cap output of the steelmaking raw material to boost prices.
“Rio Tinto’s reaction definitely hit the market as it has no intention of cutting output in order to lift prices,” said Li Wenjing, analyst at Industrial Futures in Shanghai.
“Fortescue is already standing on the edge of its breakeven price. And most domestic mills are losing money at this level as well.”
The most-traded September iron ore contract on the Dalian exchange fell nearly 4 percent to its downside limit of 414 yuan ($ 67) a tonne, the lowest for a most-active contract. It was down 3.5 percent at 416 yuan by midday.
On the Singapore Exchange, April iron ore fell 3.7 percent to $ 51.90 a tonne.
Iron ore for immediate delivery to China dropped 1.3 percent to $ 54.80 a tonne on Thursday, not far off a record low of $ 54.20 reached on Monday, according to data from The Steel Index.
Three-quarters of China’s domestic iron ore capacity is incurring losses, said Yang Jiasheng, chairman of the Metallurgical Mines Association of China, as a sustained price slump batters higher cost producers.
The price of iron ore has more than halved in the past 12 months amid a glut deepened by soaring output from low-cost mega miners from Australia and Brazil squeezing smaller suppliers out of the market.
Chinese steel futures also retreated, with the most-active October contract on the Shanghai Futures Exchange falling as far as 2,407 yuan a tonne, its lowest ever, before paring losses to 2,447 yuan, down 2.1 percent.
Also weighing on the steel market this week was news that the European Union will impose anti-dumping duties on imports of cold-rolled flat stainless steel from China and Taiwan.
Copyright Reuters, 2015
