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China iron ore futures post biggest monthly drop since May 2016

Published 09/29/2017, 12:59 PM
© Reuters. China iron ore futures post biggest monthly drop since May 2016
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  • Iron ore prices are down 21% in September, ensuring the biggest monthly decline since May 2016 and the first back-to-back quarterly loss since 2015, and analysts think the final three months of the year may bring further declines.
  • Environmental initiatives in China, which will limit the operating hours of steel smelters in a bid to ease smog in major cities, are seen hurting Chinese demand for iron ore in Q4 and possibly leading to backlogs at ports and further price falls.
  • "We think that local governments are likely to carry out the environmental cuts forcefully," Goldman Sachs (NYSE:GS) analysts say. "The market has not fully priced the negative environmental restrictions on iron ore demand. Therefore, we expect iron ore prices to fall further going into Q4."
  • But the news out of China is not all bad for the world's top suppliers to the seaborne iron ore market, as the government this week said it would cancel about a third of iron ore mining licenses - more than 1K - as part of efforts to improve air quality.
  • Relevant tickers: RIO, BHP, VALE, OTCQX:FSUMF, OTCPK:GLCNF, OTCPK:GLNCY, OTCPK:AAUKF, OTCPK:AAUKY
  • Now read: Vale (VALE) Presents At 9th Annual Itau BBA LatAm Commodities Conference - Slideshow

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