Spot iron ore fell near its lowest level in 5-1/2 years, hurt by abundant supply and slow steel demand in China with the economy likely to remain under pressure this year.
Iron ore futures in China dropped more than 2 percent at one point on Thursday. They slipped alongside other commodities such as oil and copper, with investors cautious as they waited for details of a bond-buying stimulus programme that the European Central Bank is expected to unveil later in the day.
Chinese Premier Li Keqiang said on Wednesday that China's slowing economy reflected the broader, global situation and promised that he would forge ahead with major reforms to boost growth prospects.
While Li said the economy faces downward pressure this year, he said it was not heading for a hard landing.
China's economy grew at its slowest pace in 24 years in 2014, according to data released earlier in the week, weighed down by a cooling property sector.
Iron ore for immediate delivery to China's Tianjin port .IO62-CNI=SI fell 1.3 percent to $66.50 a tonne on Wednesday, based on data compiled by The Steel Index.
That is less than a dollar away from the Dec. 23 level of $65.60, which was the weakest for the steelmaking commodity since June 2009.
A sluggish steel market in China has prompted producers to keep their iron ore stocks low. The most-traded rebar contract on the Shanghai Futures Exchange fell as far as 2,460 yuan ($396) a tonne on Thursday, not far above a record low of 2,417 yuan reached in November.
"Poor steel margins are hurting smaller steel mills in China, especially given the current state of tight credit where they have very little cash to be able to withstand losses," said a Singapore-based trader.
Shagang Group, China's biggest privately-owned steel firm, cut its prices for rebar steel by 120 yuan per tonne for the last 10 days of January amid high supply, traders said.
Iron ore for May delivery on the Dalian Commodity Exchange was down 1.8 percent at 487 yuan a tonne by 0312 GMT, after hitting a session-low of 484 yuan.
Citing slower growth in the global economy, credit rating agency Standard & Poor's on Wednesday cut its price forecast for iron ore to $65 per tonne for 2015 and 2016, from $85.
Source: Reuters |
