Iron ore poised to drop as China imports slow, swaps indicate
Wednesday, 5 August 2009
MELBOURNE Aug. 4 (Bloomberg): Iron ore is poised to decline from a nine-month high as rising stockpiles may reduce shipments to China, the biggest buyer of the steelmaking material.
Iron ore swaps for settlement in April, the start of the next contract year for deliveries, are trading at $87.60 a metric ton, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. That's 8.1 per cent less than the price for immediate delivery on The Steel Index.
Stockpiles have surged to the highest in more than 10 months as China's 4 trillion-yuan ($586 billion) stimulus plan spurs mills to secure supplies to meet steel demand for automobiles and buildings. BHP Billiton Ltd. Chief Executive Officer Marius Kloppers, pushing for an end to the annual contract system, is selling more ore on the cash market after prices soared 33 per cent this year.
"The high stockpiles would suggest that you've got short- term weakness in iron ore prices," Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in Melbourne. Further gains in the cash price this year will be curbed by the restart of iron ore mines in China, trimming demand for imports, he said.
Iron ore swaps for settlement in April, the start of the next contract year for deliveries, are trading at $87.60 a metric ton, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. That's 8.1 per cent less than the price for immediate delivery on The Steel Index.
Stockpiles have surged to the highest in more than 10 months as China's 4 trillion-yuan ($586 billion) stimulus plan spurs mills to secure supplies to meet steel demand for automobiles and buildings. BHP Billiton Ltd. Chief Executive Officer Marius Kloppers, pushing for an end to the annual contract system, is selling more ore on the cash market after prices soared 33 per cent this year.
"The high stockpiles would suggest that you've got short- term weakness in iron ore prices," Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in Melbourne. Further gains in the cash price this year will be curbed by the restart of iron ore mines in China, trimming demand for imports, he said.