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14-08-2014, 06:56 AM
Iron ore price slumps to two-month low
DANIEL PALMER BUSINESS SPECTATOR AUGUST 14, 2014 8:35AM
THE iron ore price has slumped to its lowest level in two months as investors fret about the strength of the Chinese economy.
Benchmark iron ore for immediate delivery to the port of Tianjin in China is currently trading at $US93.20 a tonne, down almost 1 per cent from its $US94 closing mark in the previous session.
At the current price point, iron ore is at its lowest level since June 20, when it traded at $US92.10.
Earlier in June, the iron ore price dropped to as low as $US89 a tonne, but despite a minor rebound since then year-to-date falls are still over 30 per cent.
The latest downward move comes amid continued oversupply in the market due to increased supply from heavyweights like BHP Billiton and Rio Tinto and softer demand from China.
Much of the focus in the past 24 hours has been on demand as Chinese economic data failed to flatter yesterday. Of particular concern were signs of a continued slowdown in industrial production and a sharp fall in credit growth.
The recent decline comes after Goldman Sachs last week confirmed its warning for iron ore prices to average $US80 a tonne next year on the back of comments from iron ore giant Vale that hinted the glut of supply was not likely to resolve itself anytime soon.
At the same time local firm BC Iron, which made a $250 million bid for Kerry Stokes’ Iron Ore Holdings this week, suggested prices above $US100 a tonne could be expected in the next six months.
Also backing higher prices recently was Westpac senior economist Justin Smirk, who suggested prices could again rise above $US120 a tonne within the next 12 months.
“We are likely to see softer near-term growth in ore supply overall as Chinese and other sources of ore moderate production,” Mr Smirk wrote in a report last Wednesday.
“Any near-term upside surprise in demand will be a positive for prices.”
DANIEL PALMER BUSINESS SPECTATOR AUGUST 14, 2014 8:35AM
THE iron ore price has slumped to its lowest level in two months as investors fret about the strength of the Chinese economy.
Benchmark iron ore for immediate delivery to the port of Tianjin in China is currently trading at $US93.20 a tonne, down almost 1 per cent from its $US94 closing mark in the previous session.
At the current price point, iron ore is at its lowest level since June 20, when it traded at $US92.10.
Earlier in June, the iron ore price dropped to as low as $US89 a tonne, but despite a minor rebound since then year-to-date falls are still over 30 per cent.
The latest downward move comes amid continued oversupply in the market due to increased supply from heavyweights like BHP Billiton and Rio Tinto and softer demand from China.
Much of the focus in the past 24 hours has been on demand as Chinese economic data failed to flatter yesterday. Of particular concern were signs of a continued slowdown in industrial production and a sharp fall in credit growth.
The recent decline comes after Goldman Sachs last week confirmed its warning for iron ore prices to average $US80 a tonne next year on the back of comments from iron ore giant Vale that hinted the glut of supply was not likely to resolve itself anytime soon.
At the same time local firm BC Iron, which made a $250 million bid for Kerry Stokes’ Iron Ore Holdings this week, suggested prices above $US100 a tonne could be expected in the next six months.
Also backing higher prices recently was Westpac senior economist Justin Smirk, who suggested prices could again rise above $US120 a tonne within the next 12 months.
“We are likely to see softer near-term growth in ore supply overall as Chinese and other sources of ore moderate production,” Mr Smirk wrote in a report last Wednesday.
“Any near-term upside surprise in demand will be a positive for prices.”