Weak demand keeps iron ore price low

Iron ore being unloaded at a port in Rizhao, Shandong province. Iron ore demand in China, the world's largest buyer of the steel-making raw material, is expected to remain weak as steel demand contracts. [Photo/China Daily]

Iron ore demand in China, the world's largest buyer of the steel-making raw material, is expected to remain weak as steel demand contracts, according to the China Iron and Steel Association.

As demand drops this year, cuts to output will increase, reducing demand for iron ore, the group said in a monthly statement on Tuesday that summarized trends in a local price index.

Iron ore prices will not rebound as the oversupply will persist, according to the association.

Iron ore sank below $50 a metric ton last week on concern surging low-cost supply from the largest miners including BHP Billiton Ltd will boost a global surplus just as demand in China falters.

Li Xinchuang, the association's deputy secretary-general, told a conference in Perth, Australia, in March that steel consumption in China has peaked and output will shrink this year. Policymakers in the country cut interest rates last month to spur growth and followed with an easing of property rules.

"In April, it's expected that China's growth measures will have a more obvious effect," the association said. "This may improve steel demand and production, though not significantly. Demand for iron ore will remain weak."

Ore with 62 percent content at Qingdao was unchanged at $47.08 a dry ton on Monday from Thursday, according to Metal Bulletin Ltd. That is still the lowest since 2005, based on daily and weekly data from Metal Bulletin and annual benchmarks compiled by Clarkson Plc, the world's largest shipbroker, for ore delivered to China. Prices fell 34 percent this year after losing 47 percent in 2014.