Because there are signs that began last year bear market further to run, iron ore prices to record the biggest one-month drop since may of last year, because of China’s steel production, before the New Year holiday and major producers to increase supplies.
Metal communications co., Ltd. (Metal Bulletin Ltd.), according to the data provided by the Qingdao port in China on Thursday 62% grade iron ore import price $63.27 / dry tons, down 11.2% this month. On Wednesday, the steel material price down to $63.09 / dry tons, to its lowest level since May 2009, and was on track for a third monthly drop.
In 2014, iron ore prices fell 47%, because Rio tinto, BHP billiton and vale increased output, low cost and in the case of China’s slowdown in demand led to a glut. This year, moody’s investors service said on Thursday, market fundamentals may still be very weak, and is likely to continue until 2016. Australia and New Zealand banking group, said in February 18, before the start of the lunar New Year, Chinese steel mills are closed, earlier than usual, because sales are still weak.
Dutch Bank, ABN Amro Bank) metal goods, global head of the root house said: “my ‘crystal ball,’ said iron ore prices will remain at a lower level.” Winter demand, he says, is usually lower than the other time, because steel mills tend to be shut down before the lunar New Year, the so-called big four miners still expand production, in order to capture market share and squeeze out small producers.
Goldman Sachs group inc. (Goldman Sachs) on January 27, said in a report, commodity prices could fall by about 10% over the next three months. In a report on January 23, the investment bank forecast in 2015 iron ore prices from $80 to $66. Then, including Citigroup (Citigroup and UBS (UBS), including at least four other investment Banks also to downgrade its forecast. Abn amro the root house said, although prices could rebound to more than $70, but they could not have risen to more than $80.
China’s economic slowdown
China’s national bureau of statistics data show that the world’s largest consumer of iron ore rose by just 7.4% last year, the slowest pace since 1990. Compared with the same period last year 7.5%, crude steel production rose by 0.9% in 2014, 24 the weakest growth data in four years.
Sanford Bernstein (Sanford mount ernstein & Co.), a hong kong-based analyst Vanessa liu said, China’s steel mills cut output before the lunar New Year, put further pressure on prices. Anz bank said in a report on January 29th, the demand for iron ore can not recovery before the lunar New Year, because of the iron and steel sales remain weak.
That will not stop the expansion of the main producers of low cost in the because they are expected to remain profitable, and weak competitiveness of the supplier will be forced to cut output or shut down. Rio tinto group plans to output this year increased to 330 million tons from 295 million tons last year, while BHP to fiscal year 2015 production targets in a 2015 tons.