Having rebounded along with practically every other risk-asset class in the world over the last month or so, Chinese Iron Ore futures are collapsing tonight. Despite the promise of Chinese LTROs expanding credit (just like they didn't in Europe) [5], iron ore prices are down around 4% - the biggest drop in over 2 years - to as low as CNY419 (or around $62) as China Iron & Steel Association warns that overcapacity in the seaborne iron ore market will persist through to at least 2019 as the world’s largest suppliers expand production further.
Iron Ore prices are down the most in over 2 years...
[6]
“Low-cost seaborne supply entering the market is not only displacing high-cost Chinese production, but also high-cost seaborne supply,” Alan Chirgwin, BHP iron ore marketing vice president, told the conference. Supply will rise by about 100 million to 110 million tons this year, exceeding modest demand growth of about 30 million to 40 million tons, he said.
Major producers remain intent on expansions and a battle for market share is under way as miners attempt to reduce their costs faster than prices are dropping, according to Credit Suisse Group AG.
Source: Bloomberg
