Iron Ore Drops Below $80 Ton

In an Argus Media report seen by Steel Market Update, analysts suggest there could be further weakness to iron ore prices in the coming weeks. “China’s domestic steel demand rose by 0.4pc from a year earlier in January-August, official figures show. But Chinese demand may actually have fallen this year after discounting 35pc growth in steel exports, said Ian Roper, an analyst with bank CLSA.

“The core of the problem with steel demand has been the weakness in property sector. Way too much property has been built in China over and above demand,” Roper said. And while a sluggish steel sector has hit iron ore demand, supply of iron ore is likely to increase by 155mn t in 2014, above an earlier forecast of 130mn t, he said.”

The Chinese have been slow to respond to the excesses in supply and to the collapse of Chinese steel prices. The Argus Media article suggests that the margins on billet are as low as $3.25 per metric ton.

We will have more about the iron ore markets in China on Thursday when we take a look at the futures markets.

SMU Note: Wednesday and Thursday are holidays in China.