Iron ore had a 'dismal' week, slumping 10%

Photo by Jeff J Mitchell/Getty Images

Making it five losses on the trot, the spot iron ore price continued to tumble on Friday, falling to yet another all-time record low.

According to Metal Bulletin, the spot price for benchmark 62% fines fell by 72 cents, or 1.77%, to $40.03 a tonne.

For the week the price lost 10.04%, extending this year’s decline to an ugly 43.8%. Since October 12 alone, the price has fallen by 29.3%, demonstrating the acute weakness that has developed over recent months.

Analysts at Metal Bulletin described the price action in the iron ore market over the week as “dismal”, suggesting that a further drop in Chinese steel consumption, outpacing that for output, may have contributed to the weakness seen on Friday.

“CISA announced today that China’s apparent crude steel consumption fell 4.5% on the year to 57.7 million tonnes in October,” they wrote in their Friday note.

“This compares with a 3.1% drop in crude steel output to 66.12 million tonnes. Over the first ten months of 2015, apparent crude steel consumption in the world’s second-largest economy totalled 590.5 million tonnes, down 5.7% year-on-year, which compares with a crude steel output drop of just 2.2% to 675 million tonnes.”

Suggesting that the spot price may fall below the psychologically significant $40 a tonne level this evening – something that occurred in other mainland Chinese ports on Friday – the January 2016 iron ore futures contract on the Dalian Commodities Exchange fell by a further 0.49% to 305.5 yuan in overnight trade on Friday.

If sustained today, it suggests further pressure on the spot price, and likely a decline below the $40 a tonne level, may arrive later on this evening.

Dalian’s day session will resume at 12pm AEDT. Monday’s spot price fixing will be released by Metal Bulletin at 10pm AEDT.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at