Spot iron ore extends losses on weak China buying


Spot iron ore prices fell for the fourth straight day to a twenty-month low, pressured by lean buying interest from China, the world's top consumer of the steelmaking raw material.

Iron ore stockpiles at main Chinese ports have increased to record levels of above 110 million tonnes, encouraging some steel mills to sell term contract volumes and purchase spot volumes from the ports at lower prices.

"Reports of Chinese steel mills selling term contract tonnage into the market and buying back volumes from port stocks or otherwise at lower spot prices, plus bearish sentiment around slower Chinese economic growth and property construction, continue to weigh on the market," CBA said in a research note.

Spot iron ore for immediate delivery to China dropped 1 percent to $97.5 a tonne on Tuesday, according to data compiler Steel Index, the lowest since Sept. 13, 2012.

Spot iron ore prices are down 27 percent so far this year.

"Prices have fallen quickly since last Friday and the market sees the range of $90-100 as an acceptable level," said an iron ore trader in coastal Shandong province.

"But prices may tumble to $85 in the near future if no good news comes out to support the market," the trader said.

Chinese iron ore futures for September on the Dalian Commodity Exchange broke a three-day losing streak, gaining 1.4 percent to 711 yuan by the midday break, but the rally is seen short-lived due to the increased supplies.

A 170,000-tonne cargo of 62-percent grade Australian fines was sold on Wednesday at $99.5 a tonne, and another 10,000-tonne cargo was sold at $98.5 a tonne, both for June delivery, traders said.

China's biggest private steelmaker Jiangsu Shagang Group will cut steel rebar prices by 90 yuan ($14.43) a tonne for late May bookings, traders said. The move reflects the fragile market sentiment and could further weigh on steel prices, which have already fallen 17 percent so far this year, the traders said.

On the Shanghai Futures Exchange, the benchmark rebar contract for October delivery drifted 0.3 percent higher to 3,082 yuan a tonne, after touching a record low of 3,055 yuan.

Shanghai rebar futures had fallen for five consecutive days through Tuesday.

Source from : Reuters