Iron ore slump worsens, Dalian futures contract drops to new low
Situation in the iron ore markets has worsened with the futures contract in China dipping to a new low.
The most active three-month iron ore futures contract for September delivery on the Dalian Commodity Exchange in China hit a low of 368 yuan ($59) per tonne; its lowest since the launch of the contract in October 2013.
Friday's close marked the fourth consecutive weekly loss in wake of falling demand from steelmakers, oversupply and a stronger dollar. Meanwhile, iron spot markets also continued in the red.
At the end of the latest session, the benchmark 62% grade iron ore for immediate delivery to Tianjin, China was trading at $47.80 per tonne, down 0.2% from its previous close of $47.90.
Credit Suisse, Barclays, UBS and Deutsche Bank have all slashed their forecasts for iron ore, but Deutsche Bank is particularly bearish predicting a sub-$40 level before the price finds a floor. The slump’s impact has started becoming apparent.
Mid-tier Australian miner Atlas Iron, which has seen a 30% decline in its share price since January, announced on Friday that it would shut all of it mines and halt exports to Asia. The company is in discussions with creditors around options for restarting its mines when they able to turn a profit, which could be supported by investigations of further cost-reduction measures, it said.
Meanwhile, steelmaker Arrium Ltd has closed one of its two iron ore mines in Australia. Last month, Fortescue Metals Group was forced to cancel a planned debt sale following lack agreement with investors and persistent oversupply in the market.
Iron Ore Company of Canada, which is majority-owned by Rio Tinto, announced on Friday that it was cutting 150 jobs indefinitely from its mine in Labrador City, Newfoundland, Canada, as of 14 June.
The company, which employs 2,000 workers, at the site said it must cut costs to make production in Labrador viable. At 15:33 BST on Friday, leading iron ore miner Rio Tinto was down 0.51% while BHP Billiton was down 0.10%.