Dalian iron ore futures fell to near a record low on Wednesday, reflecting sustained pressure on the raw material amid waning steel demand in top consumer China. China cut export taxes on steel billet and pig iron as Beijing aims to lift shipments of surplus steel output with domestic demand shrinking. The country's steel exports topped 100 million tonnes in January-November, the first time ever.
Iron ore for May delivery on the Dalian Commodity Exchange closed down 0.7 percent at 287 yuan ($45) a tonne after falling as far as 285 yuan. The most-traded contract touched an all-time low of 284 yuan on December 4. Gaps between bids and offers for spot iron ore cargoes in China remained wide, traders said, suggesting buyers were in no rush with no recovery in sight for steel prices that have similarly plumbed record lows.
Falling Chinese steel demand has forced many producers to reduce production or shut for good, limiting appetite for iron ore and inflating stocks of imported ore at China's ports to their highest since May at nearly 90 million tonnes. Iron ore for immediate delivery to China's Tianjin port slipped 0.3 percent to $38.80 a tonne on Tuesday, according to The Steel Index (TSI).
It was the lowest on record by TSI since it began collecting data in 2008. Under the annual pricing regime that preceded the spot-based system, it was the lowest since 2005, based on data compiled by Goldman Sachs. "With steel markets weakening further and a lack of response from producers, the risks remain skewed to the downside," ANZ said in a note on the price outlook for iron ore. The first iron ore cargo from Australia's Roy Hill mine, controlled by Australian billionaire Gina Rinehart, has been loaded and will depart Port Hedland later this week, following a series of delays caused by safety and commissioning issues, mine operator Roy Hill Pty Ltd said.