Iron ore futures in Singapore are on track for their lowest month-end close in four years, as ample global supplies and elevated Chinese port stockpiles have curbed demand. The steelmaking staple slipped to near $91 a ton on Friday, losing more than 2% so far in October. It marks the seventh month this year in which futures have posted a decline. Apart from a brief recovery in August, prices have trended downward since peaking in May at $111.60.
Steel mills in China, by far the world's biggest iron ore buyer, have struggled to turn a profit amid sluggish domestic consumption and higher coking coal prices. In the latest week tracked by consultancy Mysteel, about 11% of mills were profitable, versus 45% a year earlier. Average pig iron output, a gauge of demand, also declined on a weekly basis. Meanwhile, iron ore stockpiles across China's ports rose 1% in the latest week and were up 15% year-on-year, according to Steel Home data.
Demand is likely to remain muted through the end of the year, since November and December have historically been the weakest periods for steel consumption in China. On the supply side, miner Vale SA said its third-quarter production fell short of estimates due to challenges at a mine in northern Brazil. Still, the company kept its full-year iron ore production guidance unchanged at 335 million to 345 million tons.
Iron ore in Singapore was 0.1% lower at $91.25 a ton as of 12:10 p.m. local time, while futures on the Dalian Exchange also fell. China coking coal futures advanced.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing