The spot price of iron ore plunged again on Wednesday for a weekly loss of more than 10% and deeper into uncharted territory as negative sentiment swamps the industry.
The steelmaking raw material has declined to the lowest since the inception of the spot pricing system. The 62% Fe import price including freight and insurance at the Chinese port of Tianjin lost $2.00 or 3.9% to $49.00 a tonne on wednesday.
There is little prospects of an upturn.
In a note on Wednesday Australia’s ANZ Bank commented that “mills and traders remain sidelined as threats of environmental inspections and speculation that as much as 40 percent of steel mill capacity is pegged for closure keeps the outlook negative.”
Platts News reports smaller Chinese mills unable to afford equipment upgrades are being forced to cut down or cease production as Beijing cracks down on its most polluting industries.
Steel consumption in China which imports more than 70% of the world’s iron ore fell last year for the first time since 1995 and the slowdown has coincided with a flood of new supply.
On Thursday rebar futures on the Shanghai Futures Exchange hit a session low of 2,381 yuan ($384) a tonne, the lowest level since the launch of the contract in 2009.
Chinese domestic iron ore prices suffered the same fate with Dalian Commodity Exchanged contracts first launched in October 2013 hitting a record low of 390 yuan or around $62 a tonne.
After giving up 47% in 2014, the price of iron ore is now down nearly 30% this year.
Wednesday’s peg was the lowest price since November 2008 when The SteelIndex first started tracking the spot price.
In 2008, the benchmark contract price was $60.80 a tonne, which was hiked from the annually-set price in 2007 of $36.63.
SEE ALSO: Iron ore market rebalancing won’t go smoothly
New report says large surplus this year and next will push prices to $45 a tonne by end-2014.