Iron-ore edged closer to its lowest since 2022 as the steelmaking material extended a selloff on fears for China’s crisis-wracked steel industry.
Futures in Singapore fell 1.5% to $92.20 a ton by 3:06 p.m. to head for a fourth daily decline. There’s been little sign yet that tough conditions for Chinese steel mills — oversupply, soft prices and weak profits — are improving as the world’s biggest steel industry faces up to long-term challenges.
Spot steel prices have dropped again this week, piling even more pressure on steelmakers that posted heavy losses in the year’s first half. A majority of global banks expect China’s economy to miss the government’s 5% growth target this year with Beijing avoiding any large-scale stimulus.
This summer’s steel crisis has prompted China’s biggest steelmakers to warn that the industry must adjust to a new era in which demand is expected to decline. That puts iron ore at risk after a long and lucrative era for top global miners including BHP Group and Rio Tinto.
“Demand for steel in China, the world’s biggest producer, appears set to slip,” Bloomberg Intelligence analysts Richard Bourke and Grant Sporre wrote in a note. They see Chinese steel consumption ultimately fading to between 70% and 80% of its peak, in line with historic trends for other major economies.
The fresh slump for iron ore follows a short-lived rebound above $100 a ton last week, which some observers said was unlikely to last given pressure on steel mills to cut output. 