SINGAPORE: Iron ore futures in Singapore and China extended losses on Wednesday, caught in a comprehensive commodities selloff, with buying interest for physical iron ore cargoes among Chinese steel mills staying lean.
Gold tumbled to a more than four-year low and oil and copper also pulled back as the U.S. dollar rebounded after Republicans scored a sweeping victory in US mid-term elections.
Spot iron ore prices hit their lowest since 2009 on Tuesday amid a supply glut and a slowing economy in top market China that has made the commodity among the hardest hit this year.
There was more evidence of weakness in China’s economy on Wednesday as growth in its services sector slowed to a three-month low in October, according to a private survey.
Iron ore has lost nearly 43 percent of its value in 2014, dragged down by a nearly-uninterrupted rout that began when it slid below $100 a tonne in May.
The closure of several steel mills near the capital Beijing for the Asia-Pacific Economic Cooperation meeting has also limited buying activity for spot cargoes, traders said.
The mills, including those in top producing Hebei province have been shut to cut smog before leaders, including U.S. President Barack Obama, attend the Nov. 5-11 APEC summit.
“They’re not all gone, the mills, but the interest is towards mainstream cargoes and they want to buy cheap given there’s a lot of supply around,” said a Hong Kong-based iron ore trader, referring to cargoes from top suppliers Australia and Brazil.
“Obviously, traders’ margins have gone down. You can’t make $10 out of every cargo now,” he added. Iron ore for May delivery on the Dalian Commodity Exchange fell 1.5 percent to end at 510 yuan ($83) a tonne, near the session’s low of 509 yuan, its weakest since Oct. 9.On the Singapore Exchange, the December iron ore contract slipped 0.3 percent to $76.74 a tonne.
