Iron ore prices in free fall

Wednesday, 07 August 2019 15:09:22 (GMT+3)   |   Istanbul

Iron ore prices have declined for the fifth day in a row on Wednesday, August 7, coming closer to $90/mt CFR as Chinese demand for imported material is still very weak, while sentiments have remained negative. Prices of Australian iron ore fines with 62 percent Fe content fell by $4.75/mt over the day, coming to $92-93/mt CFR, SteelOrbis was informed. Brazilian 65 percent Fe fines fell even more, by $6.75/mt to $101-102/mt CFR as supply from Brazil has already started to increase and mills’ margins have been falling.

Trade tensions between China and the US intensified late last week and more concerns have started to appear that even monetary stimulus in China will fail to keep construction from declining in the second half of the year, which will definitely affect local steel demand and the iron ore market. “Growing steel inventories and the coming rains, coupled with failures in US-China talks, are the major reasons pushing iron ore prices down more,” a Guangdong-based trader said.

Moreover, supply-demand imbalance will increase in the coming months. Elizabeth Gaines, CEO of the third largest iron ore miner in Australia, Fortescue Metals Group, expects that China’s iron ore demand will be weaker in H2 compared to H1.

There were no optimistic sentiments in the market on Wednesday. “Iron ore is sliding and will keep sliding further. We will see a new wave of recession soon,” another source commented. Futures at Dalian Commodity Exchange lost about 2.8 percent over the day, while September futures at Singapore Exchange dropped by $5.6/mt to $87.6/mt on Wednesday.

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