Iron ore seen below $40

Iron ore will probably drop below $40 a metric ton this week after stockpiles at ports in China climbed to the highest in about seven months, according to Australia & New Zealand Banking Group, which said miners had ample cargoes to sell.

Port holdings jumped 2.1% to 89.50 million tons last week, according to Shanghai Steelhome Information Technology Co. Inventories, tracked as a gauge of demand in the largest consumer, have expanded in seven of the past eight weeks.

Iron ore prices sank this year as the slowdown in China hurt demand while the top suppliers including BHP Billiton and Rio Tinto Group in Australia and Brazil’s Vale boosted low-cost output. More seaborne supply is due to commence this week as billionaire Gina Rinehart’s Roy Hill mine ships its inaugural exports from Australia. Data released on Monday show increased exports through Port Hedland, which handles shipments from BHP and Fortescue Metals Group.

“A strong build in inventories and weak steel markets continued to weigh on the iron ore market,” ANZ said in a note on Monday. “With miners having ample cargo to sell, the prospect of sub-$40 a ton prices this week looks likely.”


Spot ore with 62% content delivered to Qingdao retreated 1.8% to $40.03 a dry ton on Friday, a record low in daily prices compiled by Metal Bulletin dating back to 2009. It dropped each day last week, losing 10%. The raw material traded as low as $10.51 in 1988, when annual benchmark contracts were negotiated between the largest miners and steel producers, according to data from the International Monetary Fund.

Iron ore shipped to China from Australia’s Port Hedland rose to 31.7 million tons in November from 30.7 million tons in October and 29 million tons a year earlier, according to port authority data. Total exports were 37.3 million tons in November, compared with 36.5 million tons a month earlier and 34.4 million in November 2014, the data show.

©2015 Bloomberg News




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