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PrintShanghai rebar futures hit a record contract low on Monday and sellers slashed iron ore price offers further, hoping to lure back buyers as benchmark rates languished at the lowest level in nearly three years.
Iron ore prices have fallen more than 33 percent from this year's peak, but traders said Chinese steel mills, the world's biggest buyers, were waiting for prices to decline further with no signs that China's steel demand will recover anytime soon.
China's economic slowdown is reducing the country's demand for steel, iron ore and other commodities, raising the need for Beijing to launch more policy stimulus to ensure growth bounces back in the second half of the year.
The most-traded rebar for January delivery on the Shanghai Futures Exchange dropped as low as 3,492 yuan ($550) per tonne, the weakest since the bourse launched rebar futures in 2009. It closed little changed at 3,513 yuan.
Sellers of imported iron ore to China cut prices by another $2-$3 per tonne on Monday, according to Beijing-based consultancy Umetal.
That followed a drop in the benchmark 62-percent grade iron ore price .IO62-CNI=SI to $99.40 per tonne on Friday, the lowest since Dec. 9, 2009, based on data from information provider Steel Index.
Iron ore has fallen more than 28 percent so far this year, and prices have dropped in all but three trading sessions since early July.
"I see another $10 drop this week. Mills are preferring to wait because they're not sure how much further prices will fall," said a Hong Kong-based iron ore trader.
Prices would probably find support at about $70 per tonne, said a trader in Singapore, less than double the production cost of top miners Vale SA, Rio Tinto Ltd and BHP Billiton Ltd .
BHP Billiton last week shelved two expansion plans worth at least $40 billion, blaming soaring development costs and falling commodities prices.
Following the sustained market weakness, Standard Chartered said it had cut its iron ore price forecast for the third quarter to $110 per tonne from $130 previously, and for the fourth quarter to $115 from $160.
StanChart similarly slashed its 2013 price estimate to $135 from $182.
"The next four to five weeks can still be challenging for iron ore prices, with traditional Chinese buyers showing little interest," StanChart analysts said in a report. "We expect spot prices to stay below $100/tonne for a while before improving demand from steel mills pushes prices up around the end of September." (Source: Reuters)
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