Iron ore, steel futures slip in rout of risky assets as Chinese demand ebbs
Source: www.chinamining.org Citation: Reuters Date: August 25, 2015
Domestic iron ore and steel futures fell sharply on Monday, hitting their downside limits as they were caught up in a broad-based selloff of risky assets that was sparked by fears that a cooling Chinese economy could spark a global slowdown.
Other commodities from copper to oil fell to their lowest levels since 2009 and Asian equities plummeted, led by Chinese stocks, which dived more than 8 percent. Global markets also fell.
The spot price of iron ore, the biggest commodity produced by global miners Vale, Rio Tinto and BHP Billiton, has rebounded by more than one-quarter from a decade low of $44.10 per ton reached in July.
But a slowing Chinese economy could put the focus back on a global glut that has pulled iron ore prices down for a third year running amid shrinking steel demand in China.
"In a broad way, it feels like we`re back where we started in 2009. Things are shaky to the extent where all the progress we`ve made in the past years looks to have been erased," said Howie Lee, analyst at Phillip Futures in Singapore, on the rout in risky assets.
The latest data on China, released on Friday, showed its factory sector contracting this month at its fastest pace in more than six years.
That number weighed further on sentiment toward the Chinese economy, said Helen Lau, analyst at Argonaut Securities in Hong Kong.
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