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Iron Ore, Steel Falling And Taking The Sector With It

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Iron ore prices continued falling on Tuesday after a rebound in Chinese port stockpiles hurt the outlook for the commodity.

According to Mining.com, the benchmark 62 percent Fe import price including freight and insurance at the Chinese port of Tianjin lost $2.68 per tonne and traded at $49.60. The same publication noted on Monday that the commodity was trading at its lowest level since April 21.

Towards the beginning of the year, the commodity was trading above $60 per tonne. Mining.com stated that the price was supported by lower stockpiles in China where more than 70 percent of the 1.3 billion tonne seaborne trade occurs.

Commodity investors found no support from industry experts. Speaking to Bloomberg, Jeremy Sussman, a mining analyst at Clarksons suggested that iron ore prices can continue trading lower and could slump to $40 per tonne. The analyst's estimates are similar to those issued by Goldman Sachs, UBS and Citigroup, the Bloomberg report added.

"Momentum is clearly negative and that is going to be hard to reverse in the immediate short term," Paul Gait, an analyst at Bernstein in London also told Bloomberg. "The revealed preference of the miners is for volume over value, for tons ahead of price."

Iron Ore Producers At 52-Week Lows

Shares of Vale SA (NYSE: VALE), one of the world's largest iron ore producers traded at new 52-week lows on Tuesday at $5.20, down more than 5 percent.

Shares of Rio Tinto plc (NYSE: RIO) also established new 52-week lows on Tuesday at $38.26 as shares were lower by more than 3 percent. BHP Billiton Limited (NYSE: BHP) traded as low as $37.86 before slightly rebounding above $38.00 per share and trading lower by 3.46 percent on the day.

Iron ore producers with smaller market caps saw steeper declines on Tuesday. Cliffs Natural Resources Inc. (NYSE: CLF), a supplier of iron ore pellets to the North American steel industry saw its shares plummet more than 9 percent, establishing new 52-week lows of $3.06.

Steel Prices Lowest In Over 20 Years

A Reuters report on Monday stated that Chinese steel prices were trading at their lowest in more than 20 years as global demand continues to dip. The publication also cited analysts who are predicting that the "free-fall is not even close to an end."

Shares of United States Steel Corporation (NYSE: X) also fell to new 52-week lows of $18.52 and were lower by more than 2 percent on the day. Similarly, shares of AK Steel Holding Corporation (NYSE: AKS) lost nearly 5 percent and traded at new 52-week lows of $3.03.

Posted-In: Bernstein Bloomberg China China Iron OreAnalyst Color Commodities Markets Movers

 

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