Steel Products Prices North America

Iron Ore Drops Below $80 Ton

September 30, 2014

According to The Steel Index iron ore spot prices have dropped to $77.50 per dry metric tonne (dmt) for 62% Fe fines CFR Tianjin Port, China. This is the 52-week low for ore trading which is suffering from a slowdown in the Chinese economy.

Iron ore has been on a steady decline since the beginning of this calendar year. The 52-week high for 62% Fe fines was $139.70/dmt. Over the past four weeks 62% Fe ore has dropped $9.20/dmt or 10.6 percent.

In an Argus Media report seen by Steel Market Update, analysts suggest there could be further weakness to iron ore prices in the coming weeks. “China’s domestic steel demand rose by 0.4pc from a year earlier in January-August, official figures show. But Chinese demand may actually have fallen this year after discounting 35pc growth in steel exports, said Ian Roper, an analyst with bank CLSA.

“The core of the problem with steel demand has been the weakness in property sector. Way too much property has been built in China over and above demand,” Roper said. And while a sluggish steel sector has hit iron ore demand, supply of iron ore is likely to increase by 155mn t in 2014, above an earlier forecast of 130mn t, he said.”

The Chinese have been slow to respond to the excesses in supply and to the collapse of Chinese steel prices. The Argus Media article suggests that the margins on billet are as low as $3.25 per metric ton.

We will have more about the iron ore markets in China on Thursday when we take a look at the futures markets.

SMU Note: Wednesday and Thursday are holidays in China.