Rebar Set for Weekly Decline as Iron Ore Falls to Five-Month Low

Steel reinforcement-bar futures headed for a weekly loss as the price of iron ore, the main ingredient in steelmaking, fell to the lowest in five months. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 0.6 percent to 3,529 ($575) a metric ton and was at 3,531 at 10:15 a.m. local time.

Futures have declined 3 percent this week, the most since the week ended April 19.

Ore with 62 percent iron content at the port of Tianjin fell 1.1 percent to $125 a dry ton yesterday, according to The Steel Index Ltd. “The view that iron ore prices will continue to decline is becoming more convincing, which leads to expectations for lower steel-products prices in the second half of 2013,” Zhang Lei, analyst at Nanhua Futures Co., said by phone from Shenyang today.

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Unexpected surge in the global iron ore price

At $80 in September 2012, the iron ore price was at its lowest for the past 3 years. In 3 months, it surged to a current price around $150 a tonne, a 80% increase! But will it last? As it is often the case, China is the reason for the soaring price of the metal required to produce steel.

Chinese steelmakers absorb 60% of the global iron ore and are doing all they can to put their hands on any available cargo. It is true that at this time of year, China needs to import more since Chinese iron refining factories are typically idling in winter. China also imports more at the beginning of the year in order not suffer from supply disruptions in case the iron ore mines in Australia and Brazil get flooded as it is the beginning of the rainy season in these two countries. However, the current rush exceeds the usual seasonal increase.

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Will iron ore rebound?

Iron ore prices hit a three-year low of $86.70 per ton earlier this month on fears of a slowdown in Chinese demand. So far iron ore is down 25% this year and its by product steel dropped 10 percent in 2012. Iron ore has struggled to sustain price gains since rebounding, with the outlook for Chinese steel demand staying blurry despite a recent increase in spot steel and futures prices.

“There’s not going to be a recovery in steel in the next six months,” says Craig Bouchard, who founded Schiller Park, Illinois- based Shale-Inland in 2010, a diversified steel services company. “You can’t expect a recovery in iron-ore prices until we see a recovery in the world economy.”

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Chinese Rebar hits 5-1/2 month low as Iron Ore sags

Shanghai rebar fell to its lowest level in more than five months on Tuesday, stretching its losses into a third straight session, amid thin Chinese demand that could prompt producers in the world’s biggest steel market to curb output.

The most briskly traded rebar contract for October delivery on the Shanghai Futures Exchange touched a session low of 4,055 yuan ($640) a tonne, last seen on Nov. 30, before closing at 4,090 yuan, down 1.1 percent.

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Brazilian Iron Ore and the Environment

Three U.S. companies that are leaders in their fields–Nucor in steel, Cargill in agriculture, and ThyssenKrupp Waupaca in iron castings–are three of the leading U.S. purchasers of Brazilian pig iron. What are these American leaders doing to ensure that the supply chains of their Brazilian pig suppliers–particularly the camps of men who chop or chain-saw down eucalyptus trees and smolder them for eight days to make the charcoal feedstock for pig–are upholding Brazil’s environmental and labor laws?

As one surveys the Brazilian scene for companies that are recalcitrant in meeting their responsibilities to uphold environmental and labor laws in the supply chain, Brazilian pig producer Cosipar sticks out like a sore thumb. Cosipar has been expelled from Brazil’s National Pact for the Eradication of Slave Labor; it is not a member of the Instituto Carvão Cidadão (Citizens Charcoal Institute), the other Brazilian organization that ensures that its members are observing labor laws throughout their entire supply chain.

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Iron ore in record slide as China demand slows

Iron 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.

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Iron Ore’s Worst Rout in 15 Months Seen Deepening as China’s Growth Slows

Prices of fines with 62 percent iron content delivered to the port of Tianjin plunged 18 percent in the past six weeks after reaching $191.90 on Feb. 16, the highest since at least 2008, The Steel Index data show. The cash price hasn’t traded at less than $140 per ton since September 2010. Swaps for December are at $126.87 per ton, according to Singapore Exchange Ltd.

Iron ore’s biggest decline in 15 months may worsen as the economy slows in China, the largest importer, the European debt crisis persists and BHP Billiton Ltd. (BHP) and Rio Tinto Group increase production, analysts said.

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Iron Ore’s Four-Year Slide Hitting Mining Earnings: Commodities

Global prices may fall 29 percent to an average $123 a metric ton in 2015 from a record $173 this year, according to the median estimates of 10 analysts surveyed by Bloomberg News. The decline contrasts with estimates for little change in copper and a 10 percent increase for aluminum in the same period, London Metal Exchange futures prices show.

Iron ore is set for the first four- year drop since at least 1982 as supplies surge, threatening to end record earnings at Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the world´s biggest producers.

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