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.