November 19, 2014 / 7:38 AM / 4 years ago

UPDATE 2-Iron ore price hits five-year low, no year-end restocking seen

* Spot iron ore drops to $70/tonne, down 48 pct this year
    * No meaningful China restocking seen amid tighter credit
-CBA

 (Updates with latest spot iron ore price)
    By Manolo Serapio Jr
    SINGAPORE, Nov 19 (Reuters) - Iron ore prices slid to their
lowest level in more than five years on Wednesday as a supply
glut kept battering the market.
    Iron ore has lost nearly half its value this year, hit hard
by a slowing economy in top consumer China. Analysts are ruling
out any Chinese restocking that typically supports prices
towards the end of each year.
    "We no longer expect a meaningful iron ore restock later in
the year as steel mills in China are content to purchase iron
ore at their convenience, either from the port or from domestic
producers, due to its wide availability," Commonwealth Bank of
Australia said in a note.
    "Tighter credit is also forcing many steel mills to adjust
to lower inventory levels."
    The benchmark spot price .IO62-CNI=SI slid 2.9 percent to
$70 a tonne on Wednesday, a level last seen in June 2009, based
on data compiled by The Steel Index. It has fallen 48 percent
this year.    
    Iron ore for May delivery on the Dalian Commodity Exchange
 fell by as much as 4.7 percent to 469 yuan ($77) a
tonne, its lowest since the market launched iron ore futures in
October 2013. It closed down 3.9 percent at 473 yuan.
    That adds to a 4 percent slide on Tuesday fuelled by data
showing a deeper decline in China's home prices in October. On
the Singapore Exchange, the December iron ore contract 
was down 1.4 percent at $70.01 a tonne by 0706 GMT. 
    The housing data was the latest sign of economic weakness in
China, where apparent steel consumption dropped 1.4 percent to
619.61 million tonnes in the January-October period, the China
Iron and Steel Association said on Monday.
    Stocks of imported iron ore at China's ports rose for a
second straight week to 108.75 million tonnes last week
SH-TOT-IRONINV, according to consultancy SteelHome, although
traders say some are trying to unload cargoes as prices skid.
    "It's near the end of the year and traders are trying to
sell port cargoes to pay bank loans and that's adding pressure
on prices," said a trader in China's eastern Shandong province
who is aiming to sell a 90,000-tonne cargo of Brazilian iron ore
fines.
    Meanwhile tug boat engineers at Port Hedland, Australia's
biggest iron ore port, plan to hold a four-hour work stoppage on
Nov. 22, tug operator Teekay Shipping said, threatening
exports from BHP Billiton and Fortescue Metals Group
. 
    
 Rebar and iron ore prices at 0706 GMT

 Contract                          Last    Change   Pct Change
 SHFE REBAR MAY5                   2446    -16.00        -0.65
 DALIAN IRON ORE DCE DCIO MAY5      473    -19.00        -3.86
 SGX IRON ORE FUTURES DEC         70.01     -0.96        -1.35
 METAL BULLETIN INDEX              71.8     -3.28        -4.37

 Dalian iron ore and Shanghai rebar in yuan/tonne
 Index in dollars/tonne
(1 US dollar = 6.1202 Chinese yuan)

 (Additional reporting by Eric Onstad in London; Editing by
Subhranshu Sahu and Greg Mahlich)
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