BEIJING: The iron ore market remained weak on Monday with long-suffering Chinese traders unwilling to risk any more purchases amid fears that prices will plummet further following a record decline last week.
"Plummet is an understatement -- no one can see the bottom and they all just want out," said a commodities broker based in Hong Kong.
"Some people are trying to pick up bargains but if next week the price drops another $10, it might not seem such a bargain after all," he said.
Iron ore prices fell by the highest weekly margin ever last week, with demand from top customer China slumping as its steel mills slashed output.
Platts' index for 62 percent iron ore fell to $116.75 per tonne by the end of Friday, down 19 percent over the week. The index has plummeted nearly 36 percent since mid-September.
Zhang Changfu, vice-chairman of the China Iron and Steel Association, told a news briefing on Monday that he expected iron ore prices to see further declines, with no demand recovery in sight.
After remaining at more than 1.9 million tonnes for nearly nine months, China's daily steel output fell to 1.79 million tonnes in mid-October, with mills preferring to start overhauls than contribute further to a supply glut.
But there are signs Chinese steel prices have already bottomed out, with buyers encouraged by suggestions made last week by Premier Wen Jiabao that China's tough credit squeeze could be adjusted.
The most traded rebar contract on the Shanghai Futures Exchange rose slightly to 4,129 yuan ($649) per tonne in the Monday morning session, and is now up 7.6 percent from its record low of Oct. 20.
Leading Chinese mill Baosteel was also talking up its prospects, telling an online shareholder briefing on Monday that global iron ore prices had reached a "turning point" that would benefit both miners and steelmakers.
But the broker was pessimistic, saying "there is so much cash available that everyone is looking for any piece of good news to pump it into a market."
"We don't have the free flow of credit so that everyone can use each other's money to get the market moving -- who knows what will get things moving again? Under the current circumstances I am not bullish at all. We will be lucky to get back to levels of $150 by next year."
Despite the gloom, there has been no slowdown in deliveries from the big suppliers. Zhang of CISA said stockpiles of imported ore at nine major ports currently stood at 98 million tonnes.
"I think traders are suffering the most right now -- obviously the decision is either to sell now and make losses, or to wait and risk further losses," said a trader based in Beijing.
"A lot of it has been bought at $150, $160, even $180 (per tonne) and now we are lucky to get $120," he added.
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