Snipped from the FT
Iron ore is closely followed by the financial community because it is seen as a proxy for industrial activity and construction in China, which imports almost two-thirds of the world’s seaborne trade.
The commodity is also critical for the profitability of many large mining companies, including BHP and Rio, and leading steelmakers such as ArcelorMittal and Baosteel.
It was among the few commodities to register a year-on-year increase in average prices in 2013. However, benchmark prices for delivery into China have fallen by more than 7 per cent to $124.40 a tonne this year.
Many analysts believe 2014 could be the year in which rising seaborne supply finally overwhelms Chinese demand growth, sending prices sharply lower. In a recent report, UBS said supply increases from companies such as BHP, Rio and Vale would push the seaborne iron ore market to a surplus of 94m tonnes this year from a balanced market in 2013.
