Economy
Iron Ore-Spot prices fall further, traders eyeing Japan
(Agencies)
Updated: 2011-03-18 10:59
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Spot iron ore prices extended falls on Wednesday, with steel mills from top consumer China still reluctant to buy on expectations that weaker Japanese demand will improve supplies, the Reuters reported.
Steelmaking facilities in Japan, the world's second-largest producer after China, have been disrupted as a result of the massive earthquake and tsunami that struck the country last Friday.
Spot offers of Indian ore with 63.5 percent iron fell to as low as $168-$170 per ton delivered to China, from $170-$174 a ton on Tuesday, traders said.
Prices have dropped around 15 percent from their peak of around $200 per tonin mid-February, and traders do not expect the situation to improve, given the low trading volumes.
Analysts said speculative trade activity was the main reason for the price surge in January, and the market had not yet reached the end of a correction.
"Given the high inventory levels at steel mills and at the ports, as well as expectations of further price falls after the Japan earthquake, I think $160 would be reasonable," said Wu Wen'an, analyst with HNA Topwin Futures in Shanghai.
While the quake will not make a huge difference to available iron ore supplies, it has had a psychological impact on Chinese traders and prices are falling more quickly, Oriental Securities said in a note.
Traders are looking to pick up cargoes diverted from Japan following the suspension of a number of ports and mills in the country.
"Traders don't expect a big surge in iron ore supplies because Japan might reduce its iron ore consumption in the near term, but some are actively searching for any possible shipments destined for Japan at a cheaper price," the trader added.
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