Prices for iron ore fell for a fourth consecutive session on Wednesday, staging their largest one-day percentage decline in over a year, amid signs strong demand in China — the world’s biggest consumer — is beginning to fade.
Ore with 62% content in Qingdao dropped 8.5% to $68.04 a tonne, the lowest level since Nov. 7 and the largest percentage decline since March 9, 2016, according to the Metal Bulletin. Meanwhile, iron ore for immediate delivery to the port of Tianjin fell 0.7% $72.5 a tonne, its lowest since Nov. 30. Earlier in Asia, futures in Dalian settled 3.3% lower at 506 yuan, the lowest price since Jan. 10.
The commodity, which last year climbed 85%, not only is now in bear market, but has also lost 28.3% in 2017 so far.
“Recent precipitous declines appear to provide an insight into the current extent of the unbalanced fundamentals associated with the iron ore market,” said Metal Bulletin analysts.
In dollar terms, the $6.34 drop in the benchmark price was the largest movement since March 2014, the report said.
Some believe the current drop in prices have its roots in mounting inventory at Chinese ports, though recent reports say they have started to wane.
Yet there are some, such as Stan Wholley, president for the Americas at CSA Global, and who has vast experience in the iron ore market, who believe the current price correction is not the end of the world.
“If we go back nine or eight months, iron ore was in the $40s and everyone was saying there was no reason to see a recovery, and that it would probably stay in the range of $40 to $60 for the next two to three years,” Wholley told MINING.com last month. “Those pundits were shown to be very wrong (…) If you look at current prices in context, you’ll see all of the majors are making incredibly good margins at the moment and even small or mid-tier iron producers are making money at current prices.”
The consultant, with more than 25 years of experience in exploration and mining geology, particularly in the iron ore sector, said he didn’t believe prices would return to the highs hit between 2008 and 2012, but he added that as far as they hover in the $60-$90 range, it’d be enough for most producers to keep their business not just going, but doing well.