庫4.jpg)
Save
PrintChinese steel mills, suffering from weak demand at home, have either defaulted on supply contracts or have deferred taking shipment of as much as four million tons of iron ore this month after a rapid decline in prices, traders said.
The bulk of that contracted volume has found its way into the spot market, adding pressure to iron ore prices that have slumped 23 percent this year.
“In terms of defaults and deferrals together, you’re looking at three to four million tons so far this month,” said an iron ore trader in Singapore, who spoke to Chinese buyers who have either canceled or postponed shipments.
Steel mills locked into long-term ore-purchasing contracts can be tempted to default on those agreements when the spot, or noncontract, price of iron ore falls below their contracted prices.
“There is a coordinated default on the long-term contracts which explains why the miners are having so many spot tenders on a daily basis,” said a trader in Hong Kong, who estimated that the volume of defaults had reached two to three million tons. The traders and an industry official declined to be identified because they were not authorized to talk to the news media.
High-grade ore, with 62 percent iron content, fell 2.7 percent to $106.40 a ton Tuesday, its weakest since 2009.
The latest round of defaults marks the second time this year that Chinese steel mills have either defaulted on supply contracts or deferred delivery of iron ore from miners as they coped with sliding steel prices at home.
Shanghai steel rebar futures, down nearly 14 percent this year, set a record low of 3,565 renminbi, or about $560, per ton Wednesday.
“We have cut shipments from miners this year and mainly purchased domestic ore in the first half as prices are falling so rapidly,” said the industry official, who works at a midsize Chinese steel mill that has supply contracts with Vale and Rio Tinto. (Source: Reuters)
Copyright © 2013 Ferro-Alloys.Com. All Rights Reserved. Without permission, any unit and individual shall not copy or reprint!
- [Editor:editor]
Daily News
Research
Magazine
Company Database
Customized Database
Conferences
Advertisement
Trade
Tell Us What You Think