SINGAPORE, Oct 15 (Reuters) - Iron ore futures in China and Singapore slipped on Wednesday amid a well supplied market that has prompted some Chinese traders to hold off sales to support prices.
The most-active iron ore contract for January delivery on the Dalian Commodity Exchange closed down 1 percent at 580 yuan ($95) a tonne. The December iron ore contract on the Singapore Exchange lost 1.4 percent to $81.86 a tonne.
The retreat in futures came after a 4 percent spike on Monday that pushed benchmark spot iron ore prices back above $80 a tonne to the highest since mid-September.
"Many traders have stopped offering cargoes or were delaying them hoping that prices will go further up," said an iron ore trader in Shanghai.
"There is a bit of tighter supply for some products at the ports, but we don't really see buyers willing to chase cargoes."
Iron ore for immediate delivery to China .IO62-CNI=SI was unchanged at $83.10 a tonne on Tuesday, a day after climbing 4 percent, according to data compiled by The Steel Index.
Physical activity in the iron ore market has tapered off from earlier in the week and overall spot supplies remained high, with some big Chinese steel mills still trying to unload excess cargoes from long-term contracts to the market, the trader said.
Rio Tinto , the world's No. 2 iron ore miner, said third-quarter output rose 12 percent from a year earlier to a record 76.8 million tonnes. It said it is on track to lift annual production to 295 million tonnes from 266 million tonnes last year.
Big, low-cost producers such as Rio are boosting output of iron ore in a bid to sell more to top market China as this year's price slump to five-year lows forces out smaller suppliers.
The most-traded January rebar on the Shanghai Futures Exchange closed 0.4 percent higher at 2,654 yuan a tonne after touching a three-week top of 2,674 yuan earlier.
Rebar also jumped by 4 percent on Monday in a rally fueled by short covering and which some traders attributed to reports that China's top steel producing northern Hebei province may cut production for some days during the APEC meeting in November.
Some steel mills in Hebei have been asked to reduce or suspend production during the APEC meeting in China to help improve the air quality in the capital Beijing, according to local media reports.
"Talk of steel output cuts in Hebei starting in November may tighten supplies and help lift steel prices which are starting to show better signs," ANZ Bank analysts said in a note.
Australia and Brazil, the largest iron ore producers, will raise their combined share of global seaborne supply to 90 percent as they boost output and spur the closure of higher-cost mines, according to Macquarie Group Ltd.
The two countries are forecast to increase their joint share to 79 percent in 2015 from 73 percent last year, Macquarie said in a commodities report received today. The combined 90 percent share may be reached by 2020, the bank forecast.
Iron ore tumbled 39 percent this year after Rio Tinto Group (RIO) and Vale SA raised low-cost output in Australia and Brazil, spurring a global glut. Prices are seen staying weak for a sustained period as production increases and China’s economy slows, according to Tom Albanese, former head of Rio Tinto.
“Iron ore has proved itself to be an extremely efficient market -- as low-cost supply has become increasingly available, higher-cost marginal supply has made a hasty exit,” the bank said. “The dominance in supply growth from these two countries means they are making significant gains in market share,” it said, referring to Australia and Brazil.
Ore with 62 percent content delivered to Qingdao, China dropped 1.5 percent to $82.55 a ton today, according to data from Metal Bulletin Ltd. The price fell to $77.97 on Sept. 29, the lowest level since September 2009.
The global surplus will more than triple to 163 million tons next year from 52 million this year, according to Goldman Sachs Group Inc. It projects an expansion to 245 million tons in 2016, 295 million tons in 2017 and 334 million tons in 2018.
Faltering Prices
Iron ore demand will be supported by further expansion in China as well as growth in India and the Middle East, Andrew Harding, chief executive officer of Rio Tinto’s iron ore unit, told reporters on an Oct. 9 conference call. Any move to cut output amid faltering prices would simply encourage competitors to expand production, said Harding.
Iron ore was listed by Morgan Stanley as its least-preferred metal after gold, according to a quarterly report on Oct. 8 that highlighted global oversupply. The raw material may average $100 a ton this year and $87 in 2015, the bank said.
The commodity is heading for “pitiless pricing with relentless supply expansions,” Credit Suisse Group AG said in a report received Sept. 24, paring price forecasts for next year and 2016. There’s too much supply, the bank said.
SINGAPORE, Oct 16 (Reuters) - Iron ore futures in China and Singapore extended losses on Thursday, caught up in the weakness among other risk assets as worries over the outlook for the global economy mount.
Oil prices fell to fresh four-year lows and Japanese stocks tumbled as investors shunned risks after recent weak data from the United States fueled worries over the world economy.
The most-traded iron ore for January delivery on the Dalian Commodity Exchange closed down 3.1 percent at 565 yuan($92) a tonne.
The December iron ore contract on the Singapore Exchange fell 1.9 percent to $79.09 a tonne.
Spot iron ore prices have fallen around 40 percent this year as big, low-cost suppliers boosted output at a time of slower demand growth from top buyer China.
Iron ore jumped 4 percent on Monday as Chinese steel markets rallied, but prices have come off since.
"There is a bit of volatility around the globe and it's certainly not helping things at the moment," said James Wilson, analyst at Morgans in Perth.
Asian equities tracked losses on Wall Street after U.S. retail sales and producer prices both dropped last month and manufacturing activity in New York slowed to its weakest pace since April.
Iron ore for immediate delivery to China .IO62-CNI=SI dropped 1.1 percent to $82.20 a tonne on Wednesday, slipping from a 3-1/2-week high on Monday, according to data compiled by Steel Index.
UBS CUTS FORECASTS
But after heavy losses, iron ore prices are likely to stabilise from the current quarter through January-March next year as demand picks up and more Chinese high-cost mines curb output, said Matt Fusarelli, an analyst at AME Group in Sydney.
"We have been through quite a weak period and we're expecting a cyclical lift in demand," Fusarelli said, adding that prices are expected to stabilise.
UBS estimates that around 100 million tonnes of Chinese iron ore output have been cut and about 50 million tonnes of supply from the rest of the world.
UBS has slashed its price estimates over the next five years, and now sees iron ore at between $80 and $85 a tonne versus previous forecasts of $100-$103 for the period between 2015 and 2019.
"At these prices, around 1/4 of current iron ore production is loss making. These producers will fight to cut costs and stay in the trade, but we believe a significant portion will be unable to do so," UBS said in a report.
The most-active January rebar contract on the Shanghai Futures Exchange finished nearly flat at 2,655 yuan a tonne.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
I think you're right, they will stumble through, but I suspect it will require some sort of taxpayer funded bail-out to keep its head bobbing above water.
FMG is the poster child of the Australian mining boom. Letting it fall would be a huge blow to the national psyche.
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness. "Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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