Cash prices for iron ore delivered to China, the world’s biggest buyer, may have peaked this year amid declining steel prices, Liberum Capital said.
The price for ore from Australia is trading at $105 a metric ton after dropping last week from a high this year of $105.90, according to The Steel Index.
Benchmark steel prices in China last week had their first decline in six weeks, while a measure of commodity shipping costs on the Baltic Dry Index slumped 17 percent this month on speculation the nation’s demand for iron ore may be slowing. The Steel Index price has risen 46 percent this year as the Chinese government’s stimulus plan spurred demand.
“The vertiginous rise in the spot iron ore price into China seems finally to have paused last week with prices topping out,” Liberum analysts said yesterday in an e-mailed note. “We feel we have now seen the highs for the year,” they said, citing the decline in steel and cargo prices.
Iron ore swaps for settlement this month traded at $100.60 a ton yesterday, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. They indicate prices may drop to $96.08 by December.
Ore from India dropped last week for the first time in four months, declining 0.5 percent to $110.50 a ton, according to Metal Bulletin.
The world’s three biggest suppliers BHP Billiton Ltd, Rio Tinto Group and Vale SA, control two-thirds of the world’s seaborne trade.
Source: Bloomberg
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