IRON ore prices have again lost ground overnight as investors failed to draw much encouragement from economic growth data out of China that marginally beat market expectations.
At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US67.40 a tonne, down 0.6 per cent from its previous close of $US67.80 a tonne and the lowest mark for 2015 so far.
The commodity has enjoyed just one positive trading session in the past fortnight as it drifts to within 2.5 per cent of the five-year low of $US65.60 it reached on December 23. It is currently trading at its weakest level since December 29.
The latest falls come after official data released yesterday showed the Chinese economy expanded at a 7.4 per cent annual clip in 2014, the lowest rate in 24 years and below the 7.5 per cent target set by Beijing policymakers. The numbers did, however, edge market forecasts.
Still, the data failed to hint at a rise in demand growth in China anytime soon, with investors currently finding it hard to see an end to the current oversupply situation given plans from giants Rio Tinto, BHP Billiton and Vale to expand production.
Rio announced record iron ore production numbers on Tuesday and BHP is expected to do the same today as the lowest cost suppliers in the sector ramp up pressure on smaller rivals.
Iron ore remains around 50 per cent below its position at the same time last year, with share prices of those in the sector battered over the past 12 months.
Among the hardest hit has been Atlas Iron, which yesterday said it was confident of an improved operating environment at some stage before $330 million in debt falls due by the end of 2017.
“It is our expectation that in the intervening period there will be periods of improved iron ore pricing, and/or debt markets, in which case Atlas has the opportunity to restructure its debt,” Atlas managing director Ken Brinsden said.
“Of course we have a close eye on it, but it’s our expectation that it won’t be a problem.”
Such price optimism is rare among analysts, with UBS, Macquarie and Citi last week slashing their respective price targets for the commodity to between $US58 and $US66 a tonne.
Source: The Australia
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