“The proportion of iron ore shipped to China from Australia fell a lot recently, and we can see the decline to continue in coming months,” said Wang Yingwu, analyst with Huatai Futures in Beijing.
The data also showed China’s May steel exports plunged 33.9% from a month earlier to 5.27 million tonnes.
The most-traded September iron ore on China’s Dalian Commodity Exchange ended daytime trading 4.4% lower at 1,118 yuan ($174.70) a tonne.
Benchmark 62% Fe fines imported into Northern China (CFR Qingdao) were down 2.4%, changing hands for $202.42 a tonne, according to Fastmarkets MB, on Monday afternoon.
“The sharp drop in steel prices…has led to a sharp drop in the profits of steel mills,” Sinosteel Futures analysts said in a note.
Steel demand in China has slowed down, causing a “large, short-term market volatility”, they said.
Tight global iron ore supply remains a key issue that has kept prices high.
On Friday, Vale interrupted production at its Timbopeba mine and part of its Alegria mine after prosecutors ordered the evacuation of an area around the nearby Xingu dam, in the state of Minas Gerais.
The closures will reduce its output by 40,000 iron ore tonnes a day, it said.
“It is unlikely the global balance will feel the full weight of this supply vacuum as Vale fights to overturn this ruling as quickly as it was imposed,” said Atilla Widnell, managing director at Navigate Commodities in Singapore.
(With files from Reuters)
