Rio Tinto has joined Fortescue Metals in increasing the discount offered to customers of its iron ore division as supply comes online, Chinese steel demand falls, the Chinese metals corruption inquiry continues and the overall weak of the iron spot market remains weak.
The AFR reports this morning that Rio has told customers discounts would increase from 6% to 13% for the 57% Fe product, which is the lower grade ore it ships.
This is a touch less than the 14% Fortescue has offered offered from July 1 and the AFR reports that Tim Murray from J Capital Research said the price falls were a result of a 2% fall in steel production but a 20% increase in iron ore imports. Murray told the AFR:
That equation makes for clear oversupply
Last night, September 62% Fe iron ore swaps fell 17 cents to $89.50 and the trend to lower prices seems intact for the moment.
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