Daily iron ore price update (steel plunge goes on)

Find below the iron ore price for June 10, 2013:

Note iron ore and swaps fell Friday but not yesterday. I expect further weakness on China’s lousy data and rebar falls but yesterday markets escaped. On the week, Chinese port stocks rose slightly.

Here are the charts:

Rebar average is rapidly approaching 2012 lows:

In news, over night the FT ran a story from China:

Iron ore prices will fall dramatically during the second half of this year due to sluggish steel demand in China, the head of Anshan Iron and Steel, China’s fourth-largest steelmaker by output, has predicted in a rare and candid assessment.

Zhang Xiaogang, Ansteel chairman, told the Financial Times he expected the average iron ore price for this year to be around the current level of $110 to $120 a tonne, implying that prices would continue their downward slide.

The slowdown in China’s economy, which is growing at its slowest pace in more than a decade, has hit steelmakers hard due to overcapacity in steelmaking and weak demand for steel, which is used in everything from skyscrapers to kitchen appliances and cars.

Citing academic studies, Mr Zhang said the Chinese steel industry – which has been reporting heavy losses during the past year – could take five to seven years to return to strong profitability. China is the world’s biggest steelmaker, accounting for half of global production.

“We have to prepare for a long-term struggle,” he said.

“Some people will collapse during this war of attrition, if their cash flow dries up, or if they can’t make any money at all.”

No doubt a bit of book-talking going on here but not necessarily untrue! The average over the first half has been $140 so if we’re going to average $110 for the year we’ll need to be at an $80 average for the whole second half.

Overnight the pricing for local majors actually fared well:

Not sure we’ll match it, though.

For a little treat, enjoy this WSJ video on the iron ore boom in Brazil: