Drop of iron ore further price indicates demand slumpSource from http://www.ferroalloynet.com Theiron ore market remained weak on Monday with long-suffering Chinese traders unwilling to risk more purchases amid fears that prices will plummet further following a record decline last week.
"Plummet is an understatement -- no one can see the bottom and they all just want out," said a commodities broker based in Hong Kong. "Some people are trying to pick up bargains but if next week the price drops another $10, it might not seem such a bargain after all."
Iron ore prices fell by the highest weekly margin ever last week, with demand from top customer China slumping as its steel mills slashed output.
Platts' index for 62 percent iron ore IODBZ00-PLT fell to $116.75 per tonne by the end of Friday, down 19 percent over the week. The index has dropped nearly 36 percent since mid-September.
Zhang Changfu, vice-chairman of the China Iron and Steel Association, told a news briefing on Monday that he expected iron ore prices to see further declines, with no demand recovery in sight.
After remaining at more than 1.9 million tonnes for nearly nine months, China's daily steel output fell to 1.79 million tonnes in mid-October, with mills preferring to start overhauls than contribute further to a supply glut.
But there are signs Chinese steel prices have already bottomed out, with buyers encouraged by suggestions made last week by Premier Wen Jiabao that China's tough credit squeeze could be adjusted.
The most traded rebar contract on the Shanghai Futures Exchange ended Monday at 4,123 yuan ($648.41) per tonne down from a high of 4,159 yuan but up 0.5 percent on the day. It has gained 7.6 percent since its record low of Oct. 20.
Leading Chinese mill Baoshan Iron & Steel Co Ltd (Baosteel) was also talking up its prospects, telling an online shareholder briefing on Monday that global iron ore prices had reached a "turning point" that would benefit miners and steelmakers.
But the broker was pessimistic, saying: "There is so much cash available that everyone is looking for any piece of good news to pump it into a market." This commodity needs to be evaluated with great care in terms of future usage.