Iron ore futures tumbled in Asia as port stockpiles in China expanded to the highest level in more than a year, triggering concern that a glut will persist.
The SGX AsiaClear contract for June settlement sank as much as 6.1 percent to $52.20 a metric ton in Singapore and was at $52.90 at 9:41 a.m. local time. Futures on China’s Dalian Commodity Exchange fell as much as 6.4 percent. Losses in the contracts in Asia typically presage a drop in the benchmark Metal Bulletin Ltd. price for 62 percent content spot ore in Qingdao, which is updated daily.
Iron ore is retreating from a 15-month high in April as regulatory authorities and exchanges in China team up to quell a record spike in speculation in commodities, while port holdings have expanded to almost 100 million tons. Goldman Sachs Group Inc. has said iron ore’s price gains probably won’t endure as further growth in steel consumption is unlikely and mine supplies are still rising.
“Shipment volumes and inventories at ports have increased,” Maike Futures Co. analysts including Dang Man said in a note. “Port stockpiles are elevated as the restocking cycle is coming to an end. That’s putting pressure on iron ore.”
Inventories held at ports across China rose 1.4 percent to 99.85 million tons last week to the highest since March 2015, according to data from Shanghai Steelhome Information Technology Co. After rising for three weeks, the holdings have expanded 7.3 percent this year.
Ore with 62 percent content delivered to Qingdao fell 3.3 percent to $58.29 a dry ton on Friday, taking the drop last week to 12 percent, according to Metal Bulletin Ltd. That’s the biggest weekly decline since October 2011.
Source: Bloomberg.com