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China spot iron ore prices at 6-week low as demand weakens

Chinese spot iron ore prices fell to a six-week low as purchases by steel mills in the world’s top producer stalled due to bleak demand prospects, hitting appetite for the raw material.

Iron ore for immediate delivery to China’s Tianjin port fell for the fourth straight day on Tuesday, down 2 percent to $59.3 a tonne, its lowest since May 21, according to the Steel Index. Prices lost 3.4 percent in June after a rally in April and May amid tight port stocks.

“Prices have started to fall and mills are not purchasing now. I am afraid another round of collapse is coming soon,” said an iron ore trader in coastal Shandong province.

Chinese steel mills have cut production to reduce losses as a result of a deep-seated supply glut and weakening demand amid a cooling economy.

The most-traded October rebar futures contract on the Shanghai Futures Exchange dropped for the fifth straight day to close 0.33 percent lower at 2,124 yuan a tonne — not far from a record low of 2,095 yuan hit on Tuesday.

Iron ore for September settlement on the Dalian Commodity Exchange fell for the fourth consecutive day to a session low of 411.5 yuan a tonne, its lowest since May 20.

Prices slumped 1.7 percent to 413.5 yuan a tonne by close.

“Steel mills in China are starting to announce maintenance shutdowns, with domestic demand to weaken further as rainy and hot weather slows construction activity in China,” ANZ said in a research note on Wednesday.
Source: Reuters