Iron ore futures in China fell to their lowest in more than two weeks on Tuesday, reflecting sustained pressure from a well supplied market that has shaved spot prices by 29 percent this year and stunted any recovery.
"The market is still under the shadow of oversupply," said an iron ore trader in Shanghai."Demand is still growing but not as fast as before. That's the key issue."
The most-active January iron ore contract on the Dalian Commodity Exchange fell to
664 yuan ($108) a tonne, its weakest since July 25, and was down nearly 1 percent at 667 yuan 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.
Chinese traders cut their offers for iron ore cargoes stocked at ports by 5-10 yuan per
tonne, 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 millsincreasingly use less pollutive raw material for steelmaking in compliance with Beijing's fightagainst 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.
Source: Reuters
- metaljunction »
- Metal News
Metal News & Events
METALJUNCTION PUBLICATIONS
Coal Insights (English) Monthly
Coal Insights is a ready reckoner for anyone associated with coal. This publication is aimed at tracking everything related to coal in India.
India Coal Market Watch(English) Monthly
ICMW is a one-stop source for all news, data and research pertaining to coal demand, consumption, stocks, spot- and long-term prices with respect to the Indian Market.
India Steel Market Watch (English) Monthly
ISMW is a brand new high-end steel market report, covering all aspects of the steel industry in India.
Steel Insights(English) Monthly
Steel Insights delves into various facets of the domestic and global steel industry such as market fundamentals, raw material price trends, price forecasts etc.