SINGAPORE, March 15 (Reuters) – Iron ore sank to its weakest in three months and was headed for its biggest weekly loss since October 2011, hurt by a drop in buying interest from top importer China amid poor steel demand.
Iron ore, the main steelmaking raw material, has shed more than 10 percent this week given a steel surplus in China that confounded market hopes for a pickup in demand from March.
But a sharp rebound in Shanghai steel rebar futures on Friday, which tracked gains in equities, may help stabilise the
iron ore market.
Chinese mills produced crude steel at a record rate of 2.2 million tonnes a day in February in anticipation of a pickup in construction, which accounts for half of the country’s steel demand, from this month.
But record stockpiles of steel products pointed to slow demand. Inventory of steel products held by traders in China reached a record 22.3 million tonnes as of March 8, with long steel products accounting for about 14.1 million tonnes, according to industry consultancy Mysteel.com.
“I don’t see any mills buying (iron ore) at this point. Demand for steel products has not risen since after the Lunar New Year holiday,” said an iron ore trader in Rizhao city in China’s eastern Shandong province.
Benchmark 62-percent grade iron ore .IO62-CNI=SI slumped 4.4 percent to $132.90 a tonne on Thursday, its lowest since
Dec. 18, based on data from information provider Steel Index.
It marked the steepest daily fall for the benchmark since mid-January, putting its weekly loss so far at 10.3 percent, its biggest since sliding 18 percent for a week in late October 2011.
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