Iron ore hits new low after weakest China imports in 16 years

New iron ore price low after weakest China imports in 16 years

The iron ore price reached a fresh five-and-half-year low on Wednesday after surprisingly weak imports by top consumer China.

The CFR 62% Fe 2% Al benchmark import price at the port of Qingdao tracked by The SteelIndex declined 20c to $69.10 a tonne, the lowest since June 1, 2009.

The price of the steelmaking raw material is down just under 50% since the start of the year.

Fears of a deteriorating outlook for China, buyer of nearly 70% of the world's seaborne cargoes, intensified after customs data showed a 15% plunge in November iron ore imports to 67.4 million tonnes.

Year-on-year the decline was 13.4% and it was the first first November decline in the country's imports of the steelmaking raw material since 1998. The only other time November imports fell since records began was in 1996, according to Bloomberg.

Another indication of declining demand was evidenced by shipping rates for iron ore carriers, which fell to the lowest level since January 2009.

The once obscure Baltic Dry Shipping Index came to prominence at the start of the Chinese-led commodity supercycle around a decade ago.

The London-based Baltic Exchange tracks the cost of moving commodities along more than 50 routes around the world and the index is down 63% year to date.

Iron ore represents over 20% of the global dry bulk trade and freight rates for so-called Capesize ships which are the dominant vessels for the world's 1.3 billion tonnes seaborne iron ore trade, fell to $5,394 a day on Wednesday.

Capesize vessels can haul roughly 160,000–180,000 tonnes and daily rates topped out at an eye-watering $234,000 per day in June 2008.