[av_heading heading=’Iron Ore Becomes Punch Bag as China Concerns Drive 21% Collapse’ tag=’h3′ style=’blockquote modern-quote’ size=” subheading_active=’subheading_below’ subheading_size=’15’ padding=’1′ color=” custom_font=”][/av_heading]
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03/10/17
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Iron ore’s become the punch bag of the commodities world. The raw material is down 21 percent in September, putting it on course for the first back-to-back quarterly loss since 2015, and there’s rising concern that the final three months of the year may bring further declines.
“We anticipate the price of iron ore to remain under pressure in the coming quarter,” Geordie Wilkes, a London-based analyst at Sucden Financial Ltd., said in an email. Global demand growth will be slower this half than the first six months, while the market remains strongly supplied, according to Wilkes.
Benchmark spot ore has plunged amid concern that China’s vigorous campaign to curb pollution this winter by ordering plant halts will sap steel production and roll back demand for ore at a time when seaborne supplies are gaining strength. Goldman Sachs Group Inc. has warned even though China’s demand for steel remains robust, iron ore prices may extend losses. Asia’s top economy is central to iron ore’s fortunes as it’s the largest user.
As steel production starts to decline, and with it demand for iron, we see this as a reason behind the recent sell-off,” Wilkes said. While iron ore stockpiles “have also fallen they remain at elevated levels, and we anticipate inventories to remain high given the lower-quality ore we expect to be in stock.”
Spot ore with 62 percent content in Qingdao fell 1.3 percent to $62.05 a dry metric ton on Friday, the lowest since July 6, according to Metal Bulletin Ltd. The commodity, which posted the biggest monthly loss since May 2016, fell 4.5 percent this quarter after a 19 percent slump between April and June.
Lower prices are hurting miners, especially suppliers of lower-grade ores, which have seen weaker demand than less-polluting, higher-quality material. In Australia, Fortescue Metals Group Ltd. has fallen 14 percent in September, the biggest loss since April.
Source-Bloomberg
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