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Iron Ore Futures Tank in China amid Oversupply

November 21, 2016 at 12:07 by Vladimir Vyun

Futures for iron ore fell more than 1% in China today, hitting the lowest level in almost two weeks intraday. Prices rallied to the highest level in almost three years earlier this month but has fallen 16% since then. Market analysts argued that the rise was too steep and not supported by fundamentals.

The earlier rise of prices was a result of increasing value of coking coal, which prompted steelmakers to look for higher-quality iron ore that helps to use less fuel. But prices for coal have dropped since then, resulting in less demand for high quality iron ore. Meanwhile, stockpiles of imported iron ore in Chinese ports climbed to 110.58 million metric tons last week, up 2.83 million tons from the week before, according to data provided by SteelHome.

Iron ore for delivery in January settled down 1.6% at 552.50 yuan ($80) per metric ton on the Dalian Commodity Exchange.