Save
PrintIron ore prices have fallen to their lowest level since late 2009 as steelmakers in Europe curtail purchases, forcing miners to sell their output in the congested Asian market.
Iron ore traders and brokers said Vale of Brazil, the world’s largest iron ore miner, was diverting part of the material usually earmarked for European steel mills into the Asian spot market just as Chinese consumption slowed, creating a glut.
Benchmark iron ore prices fell yesterday to $105.75 a tonne for material containing 62 per cent iron delivered in China, down roughly 30 per cent over the past four months, according to Platts, the price reporting agency.
China is the world’s largest importer of iron ore and consumption there has slowed as the economy weakens. Still, Beijing last month imported nearly 56m tonnes of ore, up 6 per cent from the same period last year.
Iron ore has been a cash-cow for the mining sector over the past five years and the drop in prices is hurting significantly the profitability of blue-chip miners Valeand London-listed Rio Tinto, BHP Billitonand Anglo American.
The cost of Chinese steel has also plunged to levels last seen nearly three years ago, highlighting the depth of the slowdown in the world’s second-biggest economy.
Hot-rolled steel, an industry benchmark, traded at Rmb3,562 ($560) a tonne this week, down 19 per cent since April. Even as steel prices declined, Chinese steelmakers have continued to increase production, raising fears of a price crash in the coming months unless demand recovers substantially.
Steel is used in everything from bulldozers to skyscrapers and therefore demand for the metal – and its main ingredient iron ore – depends on the strength of the global economy. Of all countries in the world, China has contributed most in recent years to demand for steel due to annual economic growth of close to 10 per cent.
Last month the China Iron and Steel Association said domestic steelmakers saw profits plunge 96 per cent in the first half compared with a year ago, turning the industry into a “disaster zone”.
Copyright © 2013 Ferro-Alloys.Com. All Rights Reserved. Without permission, any unit and individual shall not copy or reprint!
- [Editor:editor]
Daily News
Research
Magazine
Company Database
Customized Database
Conferences
Advertisement
Trade
Tell Us What You Think