Iron ore in record slide as China demand slows

Iron ore Oct 26, 2011 No Comments

Iron oreIron ore with 62-percent iron content fell 7.2 percent to $128.50 a tonne on Tuesday, according to Platts. It was the biggest percentage drop for the reference price index since Platts began publishing it in November 2008.

Iron ore‘s steepest ever price slide on Tuesday reflects slowing growth in top consumer China and casts more doubts on Beijing’s commodity demand at a time when the outlook for developed economies remains shaky.

China’s appetite for iron ore has weakened with slowing steel demand from the construction sector, pushing down prices for the steel-making ingredient nearly 30 percent since early September 2011.

Some mills in China have stopped buying iron ore as they curb steel output to cope with the downturn in demand. China buys around two thirds of seaborne cargoes to feed the world’s largest steel industry, and is the biggest market for the mining giants Vale (VALE5.SA), Rio Tinto Group (RIO.AX) (RIO.L) and BHP Billiton (BHP.AX) (BLT.L).

Weak steel demand across Asia cut profits at Japan’s two biggest steelmakers — Nippon Steel Corp (5401.T) and JFE Holdings Inc (5411.T) — in the fiscal six months to September, and both slashed their full-year outlook.

via Iron ore in record slide as China demand slows | Reuters.

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Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.

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