Iron ore slump turns into rout
Iron ore prices fell again on Wednesday with the benchmark import price of 62% iron ore fines at China's Tianjin port dropping 1% to below $115 a tonne
The steelmaking ingredient is now down 15% over the last month and well below the $178 a tonne it was trading at this time last year.
Chinese import prices – the country is responsible for consuming 60% of the world's iron – are now the lowest since December 2009 according to data provided by Steelindex.
The latest downturn in the price comes as iron ore stockpiles continued to build up at the country's 25 major ports.
According to China's state news agency Xinhua during the week ending on Aug. 6 inventories climbed to 98.76 million tonnes, up 420,000 tonnes week on week.
Reuters quotes from a Deutsche Bank research note that forecasts demand for iron ore "will continue to erode" as the price of global and Chinese steel continues to slide.
The globe's most active steel futures contract – Shanghai rebar for January delivery – dropped again on Wednesday reaching Rmb3,667 ($580) per tonne, up only slightly from a record low hit on Friday.
The rout in iron ore prices may work itself out soon however:
When prices tumbled last October by $60 to reach $116.90, Chinese imports jumped 29% the following month according to customs data.
Businessweek quotes a Chinese iron ore shipping manager as saying the country's mills could take advantage of lower prices to to reduce losses "or at least break even" on the steel they're selling:
"I think it will be quite difficult to break $110 and the market could stabilise at current levels."