Iron ore ped to $80 a tonne and was on track for its first weekly in four as Chinese steel mills kept stockpiles low and traders were cautious in taking fresh cargoes ami
Post date: 25-10-2014
Iron ore has recovered from a five-year low of $77.50 at the end of September, but has struggled to sustain gains in the face of a supply glut as the biggest and lowest cost miners boost output as prices slide.
Brazil's Vale, the world's top iron ore miner, said on Thursday it produced a record high 85.7 million tonnes of iron ore in the third quarter. That followed record quarterly production as well from Australian rivals Rio Tinto and BHP Billiton.
BHP Chief Executive Andrew Mackenzie said the miner's strategy of high-volume production is the best way to profit in a gloomy market.
"We have always been of the view that the iron ore market is more likely to decline than rise, and therefore producing the maximum amount we can now is very sensible," he said on Thursday.
Iron ore for immediate delivery to China .IO62-CNI=SI fell 1.8 percent to $80 a tonne on Thursday, according to data compiled by the Steel Index. For the week, it was down 0.7 percent.
"I think traders would be cautious to take any new cargo at the moment because it's quite difficult to do any spot trade now given the volatility in prices," said an iron ore trader in Shanghai. "The risks are high."
Chinese steel mills were also keeping iron ore inventories low given recent price swings.
"Mills are not keen to purchase more than their short-term needs because they're not confident that the iron ore market has hit bottom," the trader said.
In the futures market, iron ore prices edged higher on Friday after recent losses.
Iron ore for May delivery on the Dalian Commodity Exchange rose 1.2 percent to close at 530 yuan ($87) a tonne after falling nearly 4 percent at one point on Thursday to hit its downside limit of 518 yuan.
The November iron ore contract on the Singapore Exchange rose 0.4 percent to $79.76 a tonne.