Reuters spot iron ore prices fell to fresh 11 month lows on Friday on thin appetite from top buyer China where steel futures dropped for a second day on Friday on route for a fifth weekly decline.
Iron ore prices have lost around $10 a tonne so far this week as lower steel prices and tighter credit in China as well as the uncertainty facing the global economy convinced Chinese mills there was no immediate need to restock on the steel-making raw material.
An iron ore trader in Shanghai said "I can sum up the market in one word, terrible. We're still holding on to some cargo because prices have gone down a lot since after the Chinese holiday and they continue to fall. But you can easily get cargo these days."
Traders have said the steep drop in iron ore spot prices has prompted Chinese steel mills to seek either a postponement of shipments or a renegotiation of fourth quarter contracts. But BHP Billiton the world No. 3 iron ore miner said it has not had any shipment to China cancelled or renegotiated in the last few weeks.
Index-linked iron ore prices, based on spot deals in China and used by global miners in determining contract rates, fell to their lowest since November 2010 on Thursday.
An iron ore derivatives trader in Singapore said "The physical market is still under pressure and that's not going to be bullish for the swap market. Unless people see a ray of light at the end of the tunnel, we are not going to see a significant up move on swaps."
Key to the slower demand for iron ore is the sustained decline in steel prices in China, the world biggest consumer and producer. The most-traded January rebar contract on the Shanghai Futures Exchange slipped 0.6% to CNY 4,293 a tonne by the midday break. That contract hit a record low of CNY 4,255 on Wednesday.
Rebar which lost more than 11% in September is down by 1% this week its fifth straight week of decline excluding October 3 to 7 when China was shut for a public holiday.
(Sourced from Reuters)