Iron ore price drops to double digits
Benchmark iron ore fell more than 2% on Monday to its lowest level since September 2012 when the steelmaking raw material spent two weeks below $100 a tonne.
According to data from the The Steel Index, the import price of 62% iron ore fines at China's Tianjin port was pegged at $98.50 per tonne on Monday, down 2.2% or $2.20 on the day.
Apart from that quick gap down in 2012 ore hasn't traded below $100 at all since 2009.
Reuters reports iron ore futures on the Dalian exchange at 703 yuan are now at the lowest since the launch of the first domestic Chinese contract in October.
"Now that we broke through $100, I think that's a very bearish sign. It shows you there's a lot of supply around," said a trader in Singapore.
China forges as much steel as the rest of the world combined and the globe's most active steel future – Shanghai rebar – dropped through the Rmb3,130 ($500) per tonne level last week and on Monday continued to hover near record lows of $490.
A slowdown in the world's second largest economy – particularly the property sector that accounts for almost half of all steel demand – has seen the steel price down nearly 16% this year while iron ore has lost 25.4% in value in 2014.
Iron ore has been impacted severely by the upheaval in China's steel industry where demand has weakened sharply.
China, responsible for two-thirds of the 1.2 billion tonne seaborne trade, imported 83.39 million tonnes of iron ore in April, the second highest monthly figure on record.
That figure is somewhat misleading and do not reflect strong end-user demand as some estimates put the portion of iron ore inventories that is used as collateral for trade credit – a common practice in credit scarce China – at 40%.
At the same time inventories of iron ore at Chinese ports surging 25% in 2014 to just under 110 million tonnes.