SINGAPORE: Iron ore fell back to near its lowest level in almost six years on Wednesday as trading activity wound down with top buyer China away for Lunar New Year holiday and a glut of ore likely to keep prices under pressure.
The price of the bulk commodity could pick up, however, when Chinese steel demand improves next month as the construction season gains pace with warmer weather, analysts said.
A 90,000-tonne Australian iron ore cargo for March delivery was sold on the global ORE platform on Wednesday at $62 a ton, down from $62.75 for the sale of a similar grade on Tuesday, according to the platform’s website.
That could weigh further on the benchmark price <.IO62-CNI=SI> which fell 2.3 percent to $63.60 a ton on Tuesday, according to data compiled by The Steel Index. That followed a 2.8 percent jump on Monday that lifted the price to a three-week high.
The price could improve marginally from March due to more interest from Chinese buyers as the construction season gets underway, said James Wilson, analyst at Morgans in Perth.
“It’ll give the market an awful lot more confidence if we could get to the $70s,” he said. “Having said that, given the additional volume in the market, it’s still a buyers’ market.”
Australian billionaire Gina Rinehart’s $10 billion Roy Hill iron ore mine is on track to begin exporting in September and will have shipped 5 million tons by the end of the year, adding to a global glut that slashed prices by 47 percent last year.
Iron ore fell a further 11 percent this year, touching a low of $61.10 on Feb. 5, its weakest since May 2009.
Chinese financial markets reopen on Feb. 25 after a week-long Lunar New Year break that starts on Wednesday.