20/05/14 – Iron ore prices retreat to double digits – Bearish Signals

Facing severe downside pressure from falling domestic steel prices in China amid huge overcapacity and major slowdown in demand growth, prices of iron ore slumped further to go below USD 100 mark on Monday opening.

The last time iron ore prices fell below USD 100 in September 2012, it stayed below that level for about two weeks. Apart from that quick gap down in 2012 ore hasn’t traded below USD 100 at all since 2009.

According to data from The Steel Index Ltd, iron ore with 62 percent content delivered to the Chinese port of Tianjin fell 2.2 percent to USD 98.50 a dry ton today, the lowest since Sept. 13, 2012.

The iron ore future contract for July settlement on the Singapore Exchange slid 1.1% to USD 97.90 per tonne the lowest level since April 2013. August futures declined 1 percent to USD 97.85. Prices for June fell 2.6% to USD 99.58 on May 16.

Iron ore futures at the Dalian Commodity Exchange touched a low of CNY 703 per tonne, the weakest for a most active contract since the bourse launched the product in October last year.

The domestic iron ore prices for imported iron ore lying at most of the ports also lost about CNY 10 per tonne on Monday.

According to Shanghai Steelhome Information Technology Co, iron ore inventories at ports in China rose by 1.8% to a record 112.55 million tonnes in the week to May 16 from a week earlier.

The major indicator of state of health of Chinese steel sector – Rebar futures for October delivery on the Shanghai Futures Exchange remained under CNY 3100 per tonne mark sapping the confidence of Chinese steel market players


Source – Strategic Research Institute, SteelGuru.com