July 9, Iron ore prices in Asia fell 7 per cent from a week ago, and traders said a further decline could be expected, with Chinese steel mills indicating a cut in production.
“We have heard that the Chinese are preferring to buy from the port rather than executing orders for new cargo,” said Dhruv Goel, managing partner at SKTC, a trading company in the eastern Indian state of Orissa.
Goel, who did his last deal a week ago, said he was offering his cargo lower than current prices but there were still no buyers.
On Thursday, China consultant Mysteel quoted Indian origin ores with 63.5 per cent iron content at $132 a tonne with freight, down from last week’s $142. SKTC’s Goel said he was offering iron ore at $128 a tonne C&F for 63.5 per cent grade.
“Steel mills have tried to maintain low stocks… some steelmakers have cut or curbed output, and that’s continuing to weaken buying of imported iron ore,” said an iron ore trader in Beijing.
Iron ore prices in Asia have fallen about 33 per cent since the end of April when they gave up a climb towards $200 as demand from China, the world’s largest steelmaker, weakened. China’s steel prices fell again this week, with mills and traders expecting to see no signs of a pick up in demand due to destocking during the summer season.
Swaps slide in tow Iron ore swap rates fell in tandem with spot prices with interest wavering from participants.
On Wednesday, iron ore swaps cleared by the Singapore Stock Exchange (SGX) was at $126.6, down $1.4 from the previous day. “Lower iron ore swaps volumes are transacting this week on the back of a quiet physical market,” said Gabrielle Richou, an iron ore swaps broker at Freight Investor Services in Singapore.
“Market participants are generally adopting a wait-and-see approach as little confidence is felt with the current market softening.”
Global freight prices have softened in tandem, with the Baltic Exchange’s main sea freight index, which tracks rates to ship dry commodities including iron ore, falling to its lowest level in over 14 months on Wednesday.
In east India, freight rates were flat to down from a week ago, SKTC’s Goel said. For a single port loading from Visakhapatnam to any main port in China, it was at $15-$16 a tonne, Goel said. For a double port loading, Visakhapatnam and Paradip, it was $19-$20, he added.
Source: Reuters
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