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PrintReuters reported that Chinese iron ore futures fell for a seventh straight session and spot prices dropped to near three week lows as a sluggish steel market kept buyers of the raw material scarce.
Dalian iron ore futures touched their weakest level since their mid October debut as steel prices in Shanghai hovered near their lowest in four months.
A physical iron ore trader in Hong Kong said that mills are not buying because they are very well stocked at the moment. Some miners have been asking them to take on additional tonnage under their long term contracts but mills are not very keen.
The most traded 62% grade iron ore contract for May delivery on the Dalian Commodity Exchange was down half a percent at CNY 917 per tonne by 0313 GMT. The price includes China's value added tax, port charges and other fees.
The contract fell to CNY 913 the lowest level since its launch on October 18. It hit a high of CNY 984 on its debut but has dropped steadily since.
According to data compiled by the Steel Index, iron ore for immediate delivery on China's Tianjin port .IO62-CNI=SI fell 1.1% to USD 131.80 per tonne a level unseen since October 9.
The Hong Kong trader said that we could see prices below USD 130 by next week. The market is slowly trending downwards. Global miners such as Rio Tinto and BHP Billiton are continuously expanding production hoping Chinese demand for their top earning commodity will remain firm.
But supply is bound to far outpace demand as Beijing aims for a slower, more sustainable economic growth model driven by consumption rather than steel-intensive investments.
BHP is selling 70,000 tonnes of Australian Yandi iron ore fines with iron content of around 58% at a tender closing later on Tuesday, with traders expecting the cargo to be sold at less than USD 123 per tonne.
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