Iron ore extended its dip to the
lowest level in five years on weakening demand growth
in China, the world’s biggest consumer of the metal, amid a widening global
seaborne surplus.
Ore with 62 percent content at the Chinese port of Qingdao fell 0.6 percent to $83.50 a dry ton today, the lowest since Sept. 22, 2009, according to Metal Bulletin Ltd. China’s imports of the raw material used in steelmaking declined 9.3 percent to 74.88 million metric tons in August from a month earlier, the Beijing-based customs administration said yesterday.
Prices plunged 38 percent this year as Vale SA, BHP Billiton Ltd. and Rio Tinto Group increased output, betting higher volumes will more than offset falling prices and force less competitive mines to close. New production capacity and slowing steel demand in China, which buys 67 percent of seaborne supply, have led to a global surplus that Goldman Sachs Group Inc. estimates will more than double to 175 million tons in 2015 from 72 million tons this year.
“China’s demand has clearly shifted to a lower gear,” said Ian Roper, an analyst at CLSA Ltd. in Singapore. “The story of seaborne supply outpacing demand and causing high-cost mines to close is going to be a multi-year trend,” he said by e-mail. Prices may rebound to $90 in the fourth quarter, he said.
According to Shanghai
Steelhome Information Technology Co., stockpiles at Chinese ports climbed to 111.25 million tons
as of Sept. 5, a gain of 29 percent this year and near the
record 113.7 million tons in July. Macquarie Group Ltd. reduced its price forecast for this
year by 6.5 percent to $102 a ton, and predicted a further
decline in 2015 to $92, analysts including Jim Lennon and Graeme Train wrote in a report today.
