Iron ore dropped for a seventh day, the longest losing run in more than three months, as the biggest consumer China may slow buying because of increased stockpiles.
Ore with 62 percent content at the Chinese port of Tianjin fell 1.6 percent to $137.40 per metric ton yesterday, data from The Steel Index showed. Prices last had a losing run that long in the period ended Oct. 28.
Inventories at 30 Chinese ports totaled 100.21 million tons last week, about 32 percent more than a year earlier, according to data from Mysteel.com. Steel demand in China normally increases after the weeklong Lunar New Year holidays as construction resumes. The break ended on Jan. 29 this year.
“They’re certainly not as aggressive as we’ve come to expect at this time of year,” said Daniel Hynes, director of commodity research at Citigroup Inc. in Sydney. A price rally late last year may have been down to re-stocking, he said.
Vale SA, the world’s largest iron-ore producer, said yesterday fourth-quarter profit fell 21 percent, missing analysts’ estimates, after prices dropped and the debt crisis caused European shipments to slump. The company said it expects a “tight” market for the raw material this year because of increasing Chinese demand and constrained supply expansion.
BHP, Rio Tinto
BHP Billiton Ltd., the biggest mining company, said Feb. 12 a price decline probably won’t affect plans to spend $80 billion over the next five years to boost output along with copper and coal. The shares dropped 2.2 percent to A$35.30 ($37.65) on the Australian stock exchange today. Rio Tinto Group, the third- largest mining company, declined 2.3 percent to A$67.28.
“The Chinese have been buying well in advance,” said Gavin Wendt, founder and senior resource analyst at Mine Life Pty in Sydney. “They like to buy these commodities when the price is low and buy it in significant volumes, essentially more than what they need, and stockpile it.”
The prices of hot-rolled coil, a benchmark product, traded in China at 4,239 yuan a ton yesterday, little changed from 4,219 yuan on Dec. 30, according to researcher Beijing Antaike Information Development Co. Prices have fallen 15 percent from a year earlier.
Source: Bloomberg