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Iron Ore Hits Lowest Price for 2-week

2014-08-16

Iron Ore Hits Lowest Price for 2-week

 
    13rd August 2014 – Iron ore futures in China fell to their lowest in more than two weeks. This reflecting sustained pressure from a well-supplied market that has shaved spot prices by 29% this year and stunted any recovery. “The market is still under the shadow of oversupply” said an iron ore trader in Shanghai. The demand is still growing but not as fast as before. This is the key issues.
 
      The most active January iron ore contract on the Dalian Commodity Exchange fell to RMB 664 ($108)/ tn. It is weakest since July 25, and was down nearly 1% at RMB 667 by midday. Iron ore for immediate delivery to China, IO62-CNI=SI dropped 0.4 percent to $95.30 a tonne on Monday, according to data compiled by Steel Index.
 
      China traders cut their offers for iron ore cargoes stocked at ports by RMB 5 – 10 per tonne. The Steel Index said underlining lean demand. The benchmark spot price fell below $100 in mid-May and has languished below that level since, although it has rebounded from a 21-month trough of $89 reached in June. Morgan Stanley expects a global supply surplus of 79 million tonnes this year, 158 million tonnes in 2015 and 256 million tonnes in 2018.
 
    “Amid uncertainty surrounding China’s property market, the key steel end-use sector, as well as credit and cash restraints, steel mills will continue to be reluctant to undertake any large-scale restocking,” Morgan Stanley said in a report on Monday.“As a result, upward pressure on spot iron ore prices is likely to be subdued.” Weaker steel prices have also weighed on iron ore with the January rebar contract on the Shanghai Futures Exchange down 0.7 percent at 3,063 yuan a tonne, after touching a one-week low of 3,052 yuan earlier.
 
    But some traders and analysts said supply of domestic iron ore concentrate in China has tightened after falling prices shut some high-cost producing mines. That has spurred demand for higher quality imported iron ore lump as Chinese mills increasingly use less pollutive raw material for steelmaking in compliance with Beijing’s fight against pollution.Premium for iron ore lump has risen to more than 10 cents per dry metric tonne unit from 3-4 cents previously, said another trader in Shanghai.
 
    Index in dollars/tonne, show close for the previous trading day
    (1 US dollar = 6.1563 Chinese yuan)
    Source: Reuters


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