Iron ore is getting beaten down after a flurry of warnings that gains might be vulnerable.
Futures in China have posted an unprecedented weekly loss, the most-active contract in Singapore fell for a sixth day and spot prices had the biggest slump since November last year.
“It’s an overdue correction in prices, which have risen too much,” Ralph Leszczynski, head of research at shipbroker Banchero Costa & Co, said in an e-mail, while cautioning that the drop has come despite a positive underlying picture. “Fundamentals for iron ore remain very strong at present.”
Iron ore last year rallied on stronger-than-expected demand and extended gains into this year, benefiting miners from Brazil’s Vale SA to BHP Billiton Ltd and Rio Tinto Group, as China bought record volumes.
This year’s advance has unfolded against a backdrop of warnings that gains might prove fleeting, with mines continuing to expand and concerns that China’s steel demand might falter.
Still, imports by the top buyer are expected to be at an all-time high this month, close to 100 million tonnes, and remain strong next month, Leszczynski said.
“I don’t think this is the big sell-off yet,” Tomas Gutierrez, an analyst at Kallanish Commodities, said by telephone from Shanghai.
This week’s poor performance is attributable to concerns over fresh property curbs in China, as well as uncertainty about the policy outlook from US President Donald Trump’s administration and higher US interest rates, Gutierrez said.
In Dalian, most-active futures collapsed 19 percent this week — the most on record — as steel prices backtracked, with reinforcement bar in Shanghai tumbling 12 percent.
On Friday, the iron ore contract for September lost as much as 2.2 percent to 567.5 yuan per tonne, the lowest since Jan. 10, before ending level at 580.5 yuan.
Benchmark spot ore with 62 percent content in Qingdao on Friday fell 1.5 percent to US$85.06 per dry tonne, taking this week’s retreat to 7.9 percent, according to Metal Bulletin Ltd.
In Singapore, SGX AsiaClear futures had the fourth weekly loss in five, about 9 percent lower.
Plenty of banks and even some producers have flagged risks.
Barclays PLC this week said prices will slump into the US$50s in the second half as mills’ profitability is set to drop, encouraging producers to shift consumption toward abundant lower-grade ores.
The bank was restating a bearish position.
The drop has hurt mining shares. Rio declined 4.5 percent in Sydney trading this week, wiping out most of this year’s gain.
In Brazil on Thursday, Vale retreated 1 percent and is on course for a monthly decline.
Other investors are banking on continued demand.
On Friday in Australia, China State Construction Engineering Corp (中國建築工程), the nation’s biggest builder, signed an agreement with BBI Group Pty, owned jointly by New Zealand’s Todd Corp and Nyco Pty, to develop a US$4.6 billion mine and infrastructure project.
China is the world’s largest steel maker, accounting for about half of global supply, and it is also the leading buyer of seaborne ore.
Holdings at ports have expanded to an unprecedented 132.5 million tonnes.
Gold on Friday rose US$1.30 to US$1,248.50 an ounce. The metal is up 1.5 percent from last week’s US$1,230.20.
Silver jumped US$0.16 to US$17.75 an ounce, taking its weekly gain to 2 percent.
Copper slipped US$0.01 to US$2.63 per pound, little changed from last week’s US$2.68.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB