Keeping with the pattern seen each and every day this week, the iron ore price continued to fall overnight, falling to yet another all time record low.
According to Metal Bulletin, the spot price for benchmark 62% fines fell by a further 38 cents, or 0.92%, to $40.75 a tonne.
This year it has fallen by by 43%, with almost half of that decline coming since mid-October. As the chart below reveals, it’s been nothing but one-way traffic over the past two months.
As has been the catalyst on other days, analysts at Metal Bulletin suggest weakness in Chinese steel prices contributed to the continued sell off on Thursday.
“China’s spot rebar prices softened further as a weak futures performance and concerns that cheaper iron ore would mean less steel production cuts weighed on seller sentiment,” they wrote in their Thursday note.
“Downward pressure remained on prices with levels sinking to new lows amid fears that record-low iron ore prices would encourage mills to maintain or even raise output levels.”
Indicating that further weakness in the spot price is likely to arrive this evening, and indeed a test of the $40 a tonne level, Chinese iron ore futures were hammered yet again in overnight trade.
According to the Dalian Commodities Exchange, the January 2016 iron ore futures contract cratered by a further 2.09% to 305 yuan during last night’s session, dropping to the lowest on record.
Given the benchmark spot price now sits less than 2% away from falling below the $40 a tonne level, it’s likely that a test of this level will arrive this evening should Chinese futures hold or extend their losses over the course of Friday’s day session.
Trade in Dalian will resume at 12pm AEDT. The spot price fixing from Metal Bulletin will arrive at 10pm AEDT tonight.