Iron Ore Settles at $50, Keeping up with Declining Demand

Iron ore futures approached $50 a tonne Monday, the lowest it has been in three months, going down almost 10 percent in just two weeks.

Reuters reported that the $50 a tonne price is a sign that losses will continue after Dalian futures slumped lower on Tuesday as Chinese steel producers cut output due to the decline in demand of iron ore. The output in Hebei province, which is the top steel producer in China, went down 2.5 percent in September. Meanwhile, the stockpiles of iron ore located in the ports of the world's second largest economy went up to the highest levels since May. CRU Group analyst Wang Li said, "People are bearish on steel demand for the rest of this year and production cuts will continue so that puts pressure on iron ore prices."

Before the drop on Tuesday, Dalian iron ore futures had a slight increase Monday, as reported by Hellenic Shipping News Worldwide. The $50 a tonne price of iron ore comes as China's central bank slashed interest rates for the sixth time in just under a year to give the slowing economy a nudge up.

Going a few more days back, Australian Mining reported that iron ore price fell to $50.90 on Friday, adding to its bearish sentiments. The People's Bank of China brings interest rates down to 4.35 per cent and giant miners continue to increase production rates. The metal's price has not yet dropped to the lowest it has been at $44.59, which was reached July 8 this year.

Meanwhile, the increasing stocks of iron ore at the ports of China show the declining demand for the steelmaking commodity. Inventory of the metal in some of the major ports in the country increased from 750,000 tonnes to 83.95 million tonnes as of October 23. This is the highest it has been since May.