MANILA: Chinese iron ore futures slumped more than 5 percent to a six-month low on Thursday, after sliding 6 percent in the previous session, amid persistent concern over surplus supply that has pushed the market well into bear market territory this year.
Spot iron ore prices have dropped 40 percent from this year's peak, closing out May at about $57 a tonne, the weakest in more than seven months.
"Oversupply concerns were driven by strong seaborne supply and subdued restocking demand" after China's public holidays, Commonwealth Bank of Australia analyst Vivek Dhar said in a note.
Chinese markets reopened on Wednesday after public holidays on Monday and Tuesday.
The most-active iron ore contract on the Dalian Commodity Exchange dropped as much as 5.4 percent to 415 yuan ($61) a tonne, its lowest since November 2016. It closed down 4.2 percent at 420 yuan.
"Availability is not an issue, so fundamentally that is the problem," said Kelly Teoh, broker at Clarksons Platou Futures.
"Also we're coming towards the summer where construction is going to pace down and globally when you look at things, we're not as robust as we were."
Steel consumption in China, the world's biggest consumer and producer, typically eases during summer along with construction activity.
A private business survey on Thursday showed China's manufacturing activity unexpectedly contracted in May, fuelling worries that the economy may be cooling more rapidly than expected. That contrasted with a government reading on Wednesday that suggested a modest but steady pace of growth from the previous month.
Iron ore for delivery to China's Qingdao port <.IO62-CNO=MB> slid 2.5 percent to $57.02 a tonne on Wednesday, the lowest since mid-October, according to Metal Bulletin.
The spot benchmark lost 17 percent in May, its steepest monthly decline in a year.
On the Shanghai Futures Exchange on Thursday, construction steel product rebar fell 2.8 percent to end at 3,092 yuan per tonne.
Steelmaking coal also extended losses. Coking coal on the Dalian exchange closed 4.1 percent lower at 950.50 yuan a tonne, after falling as far as 935.50 yuan, its weakest since October. It dropped by the exchange-set limit of 9 percent on Wednesday.
Comments
Comments are closed for this article.