Iron ore drops to 4-month low, copper hits 6-year low amid China concerns

Iron ore slid to a four-month low on mounting concerns that declining steel production in China will offset demand.

According to Metal Bulletin Ltd., ore with 62 percent content delivered to Qingdao lost 4.5% to $45.58 a dry metric ton on Tuesday, the lowest level since the record on July 8.

The price found a bottom at $44.59 for daily price data dating back to May 2009.

The global iron ore market remains vulnerable, with little demand observed in China, Australia & New Zealand Banking Group Ltd. said on Tuesday before the price data was released.

Last month, iron ore hit $50 amid concerns oversupply will increase as the largest miners including BHP Billiton Ltd. and Vale SA intensify production while mills in China reduce steel output. Production of steel declined again in October, according to official data.

Michael Zhu, president of Hong Kong-based trader Millennia Resources Ltd., said Tuesday before the data was released that oversupply was indeed to blame for the price pressures.

“There is hardly any Chinese steel mill making profit now, so the demand will be weak through year-end,” said Zhu, a former global sales director of Vale.

Elsewhere in the metals sector, prices of copper slipped to the lowest level since May 2009 on Tuesday, as the prospect of higher interest rates in the U.S. and slower global economic growth, particularly in China, weighed on the red metal.

Comex copper for December delivery dropped to $2.072 a pound - a level not seen in more than six years, before recovering to $2.102 a pound.

Three-month copper on the London Metal Exchange lost 1.09% to $4,651.75 a metric ton, a level not seen since June 2009.

Prices of the red metal have lost almost 30% since May as fears of a China-led global economic slowdown dampened sentiment.