It’s been a bad week for iron ore, with all indices falling further on Friday due to worries about demand, triggered by impending steel output cuts in China, which produces as much of the metal as the rest of the world combined.
Ore with 62% content in Qingdao lost $2.53 a tonne or 3.8% to close at $63.56, data from the Metal Bulletin shows. This means prices have fallen 12% this week, iron ore’s worst performance since May 2016.
In China, prices on the Dalian Commodity Exchange dropped $3.56 to $66.09 a tonne, bringing September loses so far to 16% while Singapore’s SGX AsiaClear contracts have added a weekly decline of about 10%.
The commodity has fallen every week so far in September, and this week’s losses come on the heels of the Australia’s central bank saying on Tuesday it expected rising supply, lower prices and peak steel production in China.
Most analysts are now saying they expect further price drops before the steelmaking ingredient stabilizes.
ANZ senior economist Daniel Gradwell, for one, said iron ore remains vulnerable to further near-term falls and the peak in Chinese demand for steel would continue to keep prices under pressure.
As a result, he said he expected prices to fall further and steady later at around $60 a tonne, FXStreet.com reports.
The ongoing rout in iron ore prices has hurt top producers’ shares. In Australia, Rio Tinto (ASX:RIO), closed the week 1,2% down and BHP (ASX:BHP) shares registered the exact same decline. Fortescue Metals Group (ASX:FMG), the world number 4 iron ore miner, experienced its largest weekly reversal since May (-7.76%), while Brazil’s Vale (NYSE: VALE) — the world’s top producer — has seen the value of its stock drop more than 7% this week.