The shares of our major iron ore companies – BHP, Rio Tinto and Fortescue will be closely watched Tuesday to see if there’s another day of weakness after they sold off heavily on Monday.
Some analysts say they could continue the slide Tuesday after more reports of futures losses forced traders and buyers to unwind positions on Monday
That sent prices down sharply – more than 8% by the close – during the session.
The Metal Bulletin’s Fastmarkets reported that, “Seaborne iron ore prices plunged on Monday in response to sharp losses in the futures and swaps markets.”
Traders responded to grumblings from steel mills and others in the industry about weak demand, rising stocks and poor prices.
There were stories about idled blast furnaces In the huge Tangshan steel making hub thanks to growing gloom about the weakening demand outlook in China.
The Singapore Exchange’s July futures price ended Monday trading around $US110 a tonne for 62% Fe fines delivered to northern China.
That was down from just over $US120 a tonne last Friday, a fall of 8.3%.
Chinese prices ended around $US110 to $US112 a tonne.
Fastmarkets reported that the price of 62% Fe fines delivered into northern China dropped nearly 8.2% to $US111.69, the lowest threat price has been since mid-December, 2021.
Singapore futures prices are down from the most recent peak of $US144 a tonne on June 8 and more than 50% from the all-time high of $US237 a tonne for 62% Fines in May, 2021.
They are still above the most recent low of around $US84 a tonne reached last November.
Mining stocks also slid, with Vale down 2.4% on Monday in Brazil after an 8% slide late last week.
The shares of major Australian exporters were hit harder on Monday:
BHP shares slid more than 5% to $40.26 by the close Monday.
Rio shares lost more than 5% as well to end at $101.59, while shares in Fortescue Metals Group slumped more than 8% to end at $17.
Shares in Brazil’s Vale were down more than 2% on Monday – not as large a drop as by the trio of Australian majors.
Shares in the three Aussie giants lost 4% to 5% last Friday when the nervousness about iron ore pricing really hit hard.
“Heavily subdued, covid-afflicted domestic steel consumption” continued to weigh on China’s ferrous complex, said Atilla Widnell, managing director at Navigate Commodities in Singapore, told Reuters on Monday.
Steel prices have dropped to 16-month lows as inventory rises,” analysts at Westpac said in a note.
Chinese consultancy Mysteel was quoted in a note Monday that more mills are cutting output to do maintenance due to weak margins while an index of Chinese steel profits has lost around 90% so far in June.
Downstream demand remains poor with few spot trades occurring, and the bleak outlook for China’s construction industry continues to test market confidence, Mysteel said in a separate note, according to Reuters.
