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Iron ore price drops 7% as rout continues

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Iron ore prices fell on Friday as Chinese industrial demand remained sluggish due to steel output curbs in the country.

Capacity utilization rates of 163 blast furnaces at mills across the country stood at 62.39%, as of November 5, data from Mysteel consultancy showed, down from 66.17% the week earlier.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $93.14 a tonne, down 7% from Thursday’s closing.

The most-traded iron ore futures on the Dalian Commodity Exchange, for January delivery, ended down 3.2% at 561 yuan ($87.65) per tonne. The contract fell 12.1% this week.

“We expect iron ore prices to find a floor around current levels,” ANZ Research wrote in a note.

“But, constraints on China’s steel output are likely to remain until after the Beijing Winter Olympics, so the upside looks limited in the short term.”

Weekly steel consumption in the world’s top metals consumer also dipped, down 2.3% from the previous week, according to Mysteel.

“Intensifying expectation on lower costs and weak demand will further drag steel prices,” analysts with Galaxy Futures wrote in a note.

(With files from Reuters and Bloomberg)

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