Iron ore extends losses to 2-month low amid glut concerns

Source:Reuters-Global Times Published: 2017/9/21 17:38:40

Chinese iron ore futures fell for a fifth session on Thursday, reflecting oversupply concerns as global miners ramp up output while near-term steel demand in top consumer China looks at risk.

Amid weaker futures, spot iron ore dropped below $70 a ton this week for the first time since July, as bids for physical cargoes slipped, traders said.

The most-traded iron ore on the Dalian Commodity Exchange touched a session low of 483 yuan ($73) a ton, its weakest since July 24. It was down 2.3 percent at 484 yuan.

Among the new iron ore supply to the market includes top producer Vale's S11D expansion project, which produced 12 million tons in January-August, and is expected to produce 9-11 million tons in September-December. The project will help produce up to 90 million tons a year from 2018 onward.

A Shanghai-based trader said the sustained drop in iron ore stockpiles at China's ports was not necessarily reflective of firm demand for the raw material.

"There were some delays in the discharge of ships because of stormy weather in the eastern coast of China and also other parts of North Asia," he said.

Port inventory dropped for a seventh consecutive week to 131.85 million tons last week, the lowest since mid-April, data from SteelHome consultancy showed.

Iron ore for delivery to China's Qingdao port rose 1.2 percent to $69.65 a ton on Wednesday, a day after touching a near two-month trough, according to Metal Bulletin.

In a potential risk for Chinese steel demand, the Chinese government said it would suspend construction of major public projects during winter to improve the capital's air quality.

The most-active rebar on the Shanghai Futures Exchange slipped 0.4 percent to 3,733 yuan per ton.

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