Iron Ore Price, page-2449

Iron ore price fails to find floor

The price of iron ore has extended its losing run to seven days as Chinese demand worries remain in the spotlight. The red streak has led the commodity to its lowest mark since the end of July.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US51.90 a tonne, down 0.4 per cent from $US52.10 a tonne in the prior session.

The latest descent has followed mixed economic data out of Beijing on Monday as industrial production growth slowed and the broader economy expanded at its weakest rate in six years.

However, attention over the past 24 hours has shifted to future steel output as industry giant Baosteel warned Chinese production could slump as much as 20 per cent in the years ahead.

"If we extrapolate the previous experience in Europe, the United States, Japan, their steel sectors have all gone through painful restructuring in the past, with steel output all contracting by about 20 per cent," Bloomberg News quoted Baosteel chairman Xu Lejiang as saying.

"China will eventually get there as well, regardless how long it takes."

The news does not bode well for demand for iron ore, a key steel-making component.

There has been an ongoing debate over the past 12 months about whether steel production in China may have peaked, with many analysts arguing in the affirmative against more optimistic forecasts from mining giants BHP Billiton and Rio Tinto. The Baosteel comments indicate that industry expectations may be too high.

The action comes as the big miners continue to ramp up iron ore production, with BHP yesterday reporting a 7 per cent increase in output in the three months to the end of September. The record result met market expectations.

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