In Commodity News 10/04/2015
Chinese iron ore futures dropped back on Thursday amid persistent signs that tepid demand in China and growing supplies from top miners will keep pressure on the raw material.
The collapse in prices that has pulled iron ore benchmarks to recent record lows has prompted China to cut by as much as half the resource tax it collects from domestic iron ore miners to lower their production costs.
Investors, however, still remain focused on poor demand in the world’s top consumer of the steelmaking ore and the excess supply of it coming out of Australia and Brazil.
The most-traded iron ore futures for September delivery on the Dalian Commodity Exchange fell 2 percent to 378 yuan ($61) by the midday break.
“The new tax policy will not be able to help domestic miners given 80 percent of them are already in red,” said Hu Xiaodong, an analyst at Nanhua Futures in Hangzhou.
There is also no sign suggesting a pick-up in steel demand that would prompt a greater need for iron ore, Hu said.
The most-active October rebar contract on the Shanghai Futures Exchange traded down 0.5 percent at 2,297 yuan as of midday.
Benchmark 62 percent grade iron ore for immediate delivery to China .IO62-CNI=SI edged up 0.6 percent to $47.90 a tone on Wednesday, still hovering near its lowest levels since The Steel Index began compiling the prices in late 2008.
