On a downtrend: A dump truck collects iron ore at Rio Tinto’s mine in Australia. The raw material has slumped from above US$140 a tonne early this year to below US$106. — Reuters
BEIJING: Iron ore resumed its decline, closing in on a seven-month low and nearing the US$100-a-tonne level that might start to push out some high-cost production.
The steelmaking raw material has slumped from above US$140 a tonne early this year to below US$106 on fears over China’s demand prospects.
Steel consumption hasn’t ramped up as some investors had expected in March.
Without major new stimulus measures from Beijing, a key focus of attention for iron ore is cost support.
While major global miners like BHP Group Ltd or Rio Tinto Group enjoy very low costs and high margins, some more marginal output – for example, in China or India – will feel the pinch if prices fall further.
“Cost support will be an important consideration,” Vivek Dhar, analyst at Commonwealth Bank of Australia, wrote in a note.
“Iron ore will struggle to stay meaningfully below US$100 a tonne if China’s steel demand tracks sideways this year.”
Iron ore fell 3.1% to US$105.85 a tonne by 10:22am on the Singapore Exchange yesterday. Futures in Dalian fell 1.5% while steel contracts in Shanghai were mixed. — Bloomberg
