Iron ore declined as a widening seaborne glut overshadowed prospects that policy makers in China will take more steps to bolster economic growth in the world’s biggest user.
Ore with 62 percent content delivered to the Chinese port of Tianjin fell 0.5 percent to $98.10 a dry ton today, according to The Steel Index Ltd. The commodity used to make steel has dropped 27 percent this year.
Premier Li Keqiang said the downturn pressure in China’s economy is “relatively large” and the nation will adjust policy to support the economy, according to a statement on the government’s website on May 23. China’s economy that creates demand for 69 percent of the world’s seaborne ore will grow 7.3 percent this year, the lowest since 1990, a Bloomberg survey showed. Global supplies are set to exceed demand by 175 million tons next year as exports from Australia and Brazil increase, Goldman Sachs Group Inc. estimates.
“Supply, rather than demand, is probably the key driver for iron ore prices at the moment,” said Ric Spooner, chief market analyst at CMC Markets in Sydney. “The early stages of stimulus or easing cycles tend to be bearish phases for markets including commodities.”