|Iron-Ore Prices Unlikely to Rise Soon, NDRC Says
Iron ore at a port in Qingdao in China's Shandong province.
Iron-ore prices are unlikely to rise over the next three months from their current trough, the lowest in nearly two years, China's top economic planning agency said Wednesday.
Prices for the mineral, which is forged into steel, depend almost entirely on demand from China, the world's second-largest economy, which consumes two thirds of global ore supply and makes nearly half the world's steel.
In a market-outlook report from its industry department, the National Development and Reform Commission blamed languishing ore prices on a flood of supply added by global iron-ore mining companies, as well as weak demand from Chinese steelmakers.
"In the next two to three months, iron-ore output will increase, port inventories will remain high, and under slow demand for steel products, it will be difficult for iron ore prices to rise," the commission said in its statement. Stocks at key Chinese ports stood at a record-high 113 million tons this week.
Iron ore prices sank below $100 a metric ton this week for the first time since September 2012, down 25% from the start of the year to a low of $97. "The period of China's high steel demand has passed, and iron ore demand is now rising at a slow pace of 3%-4% annually," the commission said.
The rout is prompting some industry analysts to project that Chinese policy makers may soon unwind a hawkish monetary position that has heavily cut into the domestic construction sector, the steel industry's biggest customer.