SINGAPORE, Apr 30: Iron ore prices steadied near six-week lows, with Chinese holidays draining market liquidity and traders saying a soft outlook for steel demand may keep buyers away when trade resumes on Thursday.
The iron ore physical and swaps markets have been seeing thin trades from Monday, with top iron ore importer China out for public holidays.
Iron ore with 62 percent iron content was unchanged at $134.10 a tonne on Monday, according to data provider Steel Index.
First hit on Friday, that price was the cheapest for iron ore since March 20, and traders see further downward pressure.
‘I don’t think buyers will return after the holidays. A three-day break will not really make any difference because the steel market is still seeing a lot of pressure,’ said a Singapore-based trader.
Shanghai rebar futures ended April with a loss of almost 5 percent, stretching their downward streak to a third straight month.
Iron ore, down 2.3 percent so far this month, is also on track for a third monthly loss in a row.
The price of the raw material used to make steel has fallen nearly 16 percent from this year’s peak of close to $160 reached in February.
With Chinese demand slowing while top iron ore miners continue to boost output, some analysts see prices slipping below $100 in the second half of the year.
But investment bank Macquarie said prices would still average $120 in the June to December period, supported by Chinese iron ore production, which responds quickly to price prompts.
‘Looking further out, we think projections of the sustained collapse in iron ore prices to below $100 per tonne are underestimating the reactive nature of Chinese supply, and with projects continuing to be delayed, we still believe iron ore prices have more longevity than the market gives them credit for,’ Macquarie analysts said in a note.
Some global miners have kept plans to lift output but have also been focusing on cutting costs.
Rio Tinto , the world’s No. 2 iron ore producer, plans to cut the number of jobs at its London head office to 262 from 479, according to an internal memo, as it battles falling commodity prices.
(AGENCIES)
^^^^^
Follow our WhatsApp channel