In Commodity News 09/06/2015
Iron ore futures in China dropped on Monday after data showed imports of the raw material by the world’s top consumer slid last month.
But analysts say spot iron ore prices may continue to find support from a sustained decline in stockpiles at China’s ports, which fuelled a recovery in the commodity to a 3-1/2-month high last week from a decade low below $50 a tonne in April.
“We see destocking at ports and also at steel mills and steelmakers told us it’s not quite easy to buy Pilbara fines,” said Wang Li, an analyst at CRU Group in Beijing, referring to a type of Australian iron ore.
But Wang said the price of iron ore may decline in July when China’s steel demand is seasonally weak as construction activity slows during the summer.
The most traded September iron ore contract on the Dalian Commodity Exchange closed 0.8 percent lower at 434 yuan ($70) a tonne.
China’s iron ore imports fell 11.6 percent in May from April, customs data showed, and dropped 8.4 percent from a year before.
Xia Junyan, an analyst at Everbright Futures in Shanghai, said bad weather reduced shipments from major supplier Brazil and some high-cost miners had quit the market after the slide in prices.
The fall in China’s iron ore imports was also due to lower shipments from Australia, Citigroup analysts said in a note, but they added that “imports should pick up in the following months as shipping volumes out of Australia and Brazil rebounded recently”.
Iron ore for immediate delivery to China’s Tianjin port rose 0.5 percent to $63.80 a tonne on Friday, the highest since Feb. 16, based on data compiled by The Steel Index.
Stocks of imported iron ore at China’s ports fell for the eighth straight week to 83.8 million tonnes as of June 5, according to consultancy SteelHome, which tracks the data. The port inventory, which has fallen 17.5 percent this year, is at its lowest since November 2013.
“Sufficient supply is expected for the whole year but in the short term, market supply is not quite sufficient, it’s tight,” said CRU’s Wang.
