ron ore futures in China and Singapore extended losses on Thursday, caught up in the weakness among other risk assets as worries over the outlook for the global economy mount.
Oil prices fell to fresh four-year lows and Japanese stocks tumbled as investors shunned risks after recent weak data from the United States fueled worries over the world economy.
The most-traded iron ore for January delivery on the Dalian Commodity Exchange closed down 3.1 percent at 565 yuan($92) a tonne.
The December iron ore contract on the Singapore Exchange fell 1.9 percent to $79.09 a tonne.
Spot iron ore prices have fallen around 40 percent this year as big, low-cost suppliers boosted output at a time of slower demand growth from top buyer China.
Iron ore jumped 4 percent on Monday as Chinese steel markets rallied, but prices have come off since.
"There is a bit of volatility around the globe and it's certainly not helping things at the moment," said James Wilson, analyst at Morgans in Perth.
Asian equities tracked losses on Wall Street after U.S. retail sales and producer prices both dropped last month and manufacturing activity in New York slowed to its weakest pace since April.
Iron ore for immediate delivery to China .IO62-CNI=SI dropped 1.1 percent to $82.20 a tonne on Wednesday, slipping from a 3-1/2-week high on Monday, according to data compiled by Steel Index.
UBS CUTS FORECASTS
But after heavy losses, iron ore prices are likely to stabilise from the current quarter through January-March next year as demand picks up and more Chinese high-cost mines curb output, said Matt Fusarelli, an analyst at AME Group in Sydney.
"We have been through quite a weak period and we're expecting a cyclical lift in demand," Fusarelli said, adding that prices are expected to stabilise.
UBS estimates that around 100 million tonnes of Chinese iron ore output have been cut and about 50 million tonnes of supply from the rest of the world.
UBS has slashed its price estimates over the next five years, and now sees iron ore at between $80 and $85 a tonne versus previous forecasts of $100-$103 for the period between 2015 and 2019.
"At these prices, around 1/4 of current iron ore production is loss making. These producers will fight to cut costs and stay in the trade, but we believe a significant portion will be unable to do so," UBS said in a report.
The most-active January rebar contract on the Shanghai Futures Exchange finished nearly flat at 2,655 yuan a tonne.
Average daily crude steel output from China's large steel mills rose nearly 1 percent to 1.804 million tonnes in the first 10 days of October from late September, data from the China Iron and Steel Association showed. Rebar and iron ore prices at 0701 GMT Contract Last Change Pct Change SHFE REBAR JAN5 2655 +3.00 +0.11 DALIAN IRON ORE DCE DCIO JAN5 565 -18.00 -3.09 SGX IRON ORE FUTURES DEC 79.09 -1.49 -1.85 THE STEEL INDEX 62 PCT INDEX 82.20 -0.90 -1.08 METAL BULLETIN INDEX 82.55 -1.27 -1.52 Dalian iron ore and Shanghai rebar in yuan/tonne Index in dollars/tonne, show close for the previous trading day
Source: Reuters
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