Spot iron ore prices were heading for their biggest weekly loss in seven, with growing supply and weak steel demand dragging on prices in the world's top consumer of the raw material. Benchmark 62 percent grade iron ore for immediate delivery to China fell for an eighth consecutive session, down 0.4 percent at $57.60 a tonne on Thursday, according to the Steel Index.
Limited availability of port stocks and restocking by steel mills have led to a rally of more than 20 percent in iron ore from April, but increased supply and subdued steel demand continue to pressure prices. "With some local miners resuming output and global producers increasing cargoes, the price is facing downward pressure," said Hu Xiaodong, an analyst at Nanhua Futures in Hangzhou. Iron ore futures for September delivery on the Dalian Commodity Exchange closed up 0.6 percent at 423.5 yuan ($68.33) a tonne on Friday, but posted the second straight weekly loss.
A buying spree from Chinese steel mills has stalled, while traders expect increasing cargoes since end-May and weak spot steel prices to drag on iron ore. "Steel mills have held back buying after replenishing inventories and no one wants to hold high stocks, while steel demand remains fragile and mills have to cut prices to sell," said a Shanghai-based trader. Separately, the Australian government will not back an inquiry into the drivers behind the iron ore price slump, the country's treasurer said on Thursday, a decision that will please top producers Rio Tinto BHP Billiton. The most-traded October rebar contract on the Shanghai Futures Exchange was 0.8 percent higher at 2,351 yuan a tonne by close. Prices fell for the second consecutive week.