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Iron ore price lowest in 11 months on supply pressures, weakening demand

A BHP iron ore train travelling in Western Australia. (Image courtesy of BHP)

Iron ore prices dipped on Wednesday after BHP reported higher quarterly output of the steelmaking ingredient, adding to supply-side pressures.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $93.02 a tonne Wednesday morning, down 1.31%, and the lowest since November 2021.

The world’s biggest listed miner kept its full-year iron ore production guidance unchanged, while warning that global economic uncertainty was expected to continue affecting supply chains, energy costs, labour markets and equipment and materials availability.

On Tuesday, Vale reported a 1.1% increase in quarterly iron ore production, while Rio Tinto posted a 4% rise in shipments in the last quarter compared with the previous three months.

“Negative margins and weaker demand prospects are discouraging steel mills to increase production. On the other hand, the supply side has been strong,” ANZ commodities strategists said in a note.

“With global recession risks and China’s slowdown due to its zero-covid policy and property sector downturn, many steel mills have stopped production in advance for winter repairs”, analysts at Huatai Futures said in a note.

(With files from Reuters)