World iron ore prices continue to dip towards $US100 a tonne, putting more pressure on the Australian sharemarket, the share prices of the big miners and the Australian economy.
Iron ore prices are following many other commodity prices lower – exceptions are nickel, coffee and some grains which have risen recently because of specific reasons.
Iron ore prices slipped to their lowest level since September 2012, thanks to rising supply and sluggish demand from China, the world’s top consumer which has seen stocks of ore at Chinese ports hit all time highs in the past month.
Benchmark 62% iron ore fell $US1 to $US102.70 a tonne on Friday, taking losses over the past month to 13% – and 23% since the start of the year.
But as we reported on Friday, Chinese imports of iron ore jumped more than 22% in the four months to April from the same period of 2013.
That’s despite the much weaker 2%-3% rise in crude steel output.
The weakness in iron ore prices have seen BHP shares lose 1.2% in the past month, Rio Tinto almost 4% and their big Brazilain rival Vale has seen its price slip 3%.
Chinese construction has weakened and car sales have slowed noticeably, even though they are still growing strong.
Figures out at the weekend showed an 8.8% rise in Chinese vehicle sales in April from April 2013.
A total of two million vehicles were sold in China last month, with sales of cars up 11.6%.
China’s automobile sales reached 7.93 million in the first four months of 2014, up 9.1% from the first four months of 2013.
But the growth rate in the first four months of 2013 was 13.2%, so the slowdown is quite noticeable.
Nickel is a staple steel-making commodity and has been in the doldrums for the past three years or more.
But this year, with the Indonesian government has banned exports of commodities such as nickel and copper ore.
Not helping as well has been the rising tensions between Ukraine and Russia. Russia is a big nickel producer. The fear is that sanctions might extend to trade in commodities such as nickel.
While those factors haven’t done much to help copper prices, they have helped boost nickel prices 43% so far in 2014 to close to $US20,000 a tonne.
Last week saw the strong price rally for nickel for four years after Vale (which is a big nickel producer as well as iron ore miner) shut a plant in New Caledonia after pollution problems from a spillage emerged.
LME nickel for delivery in three months rose 2.6% to end at $US19,905 a tonne in London. That left the price up 9% for the week.
The price reached $US20,500, the highest since February 2012.
New York gold futures fell on Friday for a fourth day in a row, ending below the $US1,300 an ounce level and for a weekly loss of more than 1%.
Comex June gold futures fell 10c to settle at $US1,287.60 an ounce in New York. Prices lost 1.2% for the week, the first weekly loss in three.
Comex July silver futures fell nearly 2c, or 0.1%, to $US19.12 an ounce, ending around 2.2% lower over the week.
Other metals on Comex ended on a mixed note Friday, with July copper rising 0.7%,to close at $US3.08 a pound — up about 0.5% for the week.
Unlike nickel’s 43% surge, copper prices are down 9% for the year so far.
Meanwhile, oil futures in New York ended just under $US100 a barrel at the end of trading on Saturday morning, our time.
Nymex crude oil for June delivery fell 27 USc, or 0.3%, to settle at $US99.99 a barrel, up 0.2% for the week.
In London, June Brent crude, the European benchmark, fell 15c, or 0.1%, to $US107.89 a barrel, for a weekly loss of roughly 0.6%.
