Iron-Ore Swaps Fall as China Economic Growth Loses MomentumIsaac Arnsdorf
Iron-ore swaps fell the most in two weeks after China’s economy expanded more slowly than anticipated, prompting speculation demand will be curbed from the world’s largest importer of the steelmaking commodity.
The contracts for May slid 3.6 percent to $135 a dry metric ton as of 11:12 a.m. in London, according to broker SSY Futures Ltd. That’s the biggest one-day slump since April 1, based on data from SGX AsiaClear, the largest clearer of the derivatives. The swaps traded as low as $134.
The world’s second-largest economy expanded 7.7 percent in the first quarter from a year earlier, compared with 8 percent predicted in a Bloomberg survey of 41 economists, a government report showed today. The data from China, which buys more iron ore than the rest of the world combined, drove today’s decline amid a lack of physical cargo trading, said Ben Goggin, a swaps broker at ICAP Plc in London.
“Traders are reacting to the Chinese growth data coming in below expectations,” Goggin said by e-mail. “Meanwhile the physical market was quiet, which shows the swaps are more jittery depending on macro news.”
Imported ore with 62 percent iron content at the Chinese port of Tianjin was little changed at $140.9 a ton today, according to The Steel Index Ltd. The benchmark price has slipped 11 percent since Feb. 20, when it rose to a 16-month high of $158.90. Futures for steel reinforcement bars used in construction dropped the most in more than a month, closing 2.6 percent lower at 3,738 yuan ($604) a metric ton at 3 p.m. local time, according to the Shanghai Futures Exchange.
Chinese steel mills will have less need to bid up import prices as domestic output returns amid warmer weather and stockpiles are “relatively comfortable,” according to Macquarie Group Ltd. Inventories at smaller mills could cover more than 25 days at the end of March, the bank’s analysts said in an e-mailed report today.
China’s industrial production rose 8.9 percent in March, less than the 10.1 percent forecast in a Bloomberg survey, according to the government report.
Iron ore imports rose 14 percent in March to 64.55 million tons, 2.7 percent higher than a year earlier, customs data show. The Asian nation will buy 66 percent of the world’s seaborne supply this year, according to Clarkson Plc, the world’s largest shipbroker.