Supposed better days ahead for iron ore miners may have to take a longer backseat as prices of the key steelmaking ingredient once again plummeted to below $100 per tonne.
From Friday last week to Tuesday, prices of iron ore rose more than 15 per cent after an announcement by Beijing over the weekend said it would accomplish an AU$150 billion ($US157 billion) infrastructure building plan to boost domestic spending. Iron ore rates jumped to as much as $100.20 per tonne those days.
The biggest single-pit open-cut iron ore mine in the world, the BHP Biliton Mount Whaleback mine, 455 km (283 miles) south of Port Hedland is seen in this undated handout photograph obtained August 12, 2009. BHP Billiton Ltd, the world's largest miner, reported a 30 percent slide in annual profit excluding writedowns, its first fall in seven years, pummelled by a slump in metals prices and demand.
But just as quickly as it rose, prices likewise quickly declined on the reality of a burgeoning oversupply and low demand most specially from China, the world's largest consumer of metals. The absence of more specific details on Beijing's pronouncement likewise added pressure to the decline of iron ore's spot price.
"The fundamentals haven't really changed since that news came out. There's still so much supply of steel out there and demand is really slow," a Shanghai-based iron ore trader said in Reuters News.
"There are expectations supply of raw steel could rise again because a lot of the small- and medium-sized steel mills that closed for maintenance weeks ago have now restarted production."
Chinese government data released on Tuesday showed the Asian nation's crude steel production in August fell 1.7 per cent to 58.7 million tonnes versus a year ago. From January to August, overall yield rose 2.3 per cent to 482 million tonnes.
"The effect of the infrastructure projects has passed and now the market is adjusting again to find its balance," the trader said, noting that by end of the week, prices of iron ore could plunge to $90 per tonne.
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