Spot iron ore remained firm in the final trading session of the year, but was poised to end 2015 as one of the worst performing commodities of the year due to a global glut and shrinking demand at top consumer China.
The spot price for iron ore slid 40% this year, the third straight year of losses. The market is oversupplied as China's steel demand has continued to decline after falling in 2014 for the first time in more than three decades.
Iron ore has been easily the most hard-hit industrial commodity, outstripping losses in crude oil and copper.
Iron ore for immediate delivery to China's Tianjin Port stood at $41 a ton.
Iron ore physical buying has risen in recent days as Chinese buyers stock up ahead of an expected decrease in seaborne supply early next year, another factor boosting prices, analysts said.
But the deal activity and the rally will be short-lived, as there has been no significant change in underlying demand, they cautioned.
Steel mills in China are lowering production on weak demand, thus reducing the need for iron ore. And this trend will continue into next year, traders said.
“We will see small- to mid-sized mills shut down or stop production. We may see more consolidation in the steel industry next year," sources said.
While this may further decrease demand for iron ore in the near term, demand could begin to stabilise or even recover after the consolidation, sources added.
More than 50 million tons of steel capacity has shut in China this year, including state-owned and private steelmakers, industry sources said.
Grade % Fe |
Origin |
Product |
load port |
destination |
Dec 31, 2015: cfr ($/ton) |
Dec 30, 2015: cfr ($/ton) |
Dec 29, 2015: cfr ($/ton) |
63.5/63 |
India |
Fines |
Vizag |
Qingdao |
41 |
41 |
40 |
62 |
India |
Fines |
FOB Vizag |
|
11 |
11 |
10 |
62 |
Australia |
PB |
Dampier |
Tianjin |
41 |
41 |
40 |
63.5 |
Brazil |
Fines |
Brazil |
China |
43 |
43 |
42 |
Source: India Steel Market Watch