Benchmark cash prices of iron ore imported by China, the world’s biggest buyer of the steelmaking material, fell the most since at least 2006 last week as mills cut production.

Prices dropped 17 percent to 1,000 yuan ($146) a metric ton at Beilun, where Baosteel Group Corp., China’s largest steelmaker, receives shipments, according to data from Beijing Antaike Information Development Co. That is the biggest decline since it started compiling data in June 2006.

Weak demand from automakers and builders may spur Chinese steelmakers to further cut production, the China Iron and Steel Association said Sept. 18. Iron ore cash prices have dropped 31 percent this year.

“A combination of inventory de-stocking and Chinese steel production cuts has led to a collapse” in cash prices, JPMorgan Chase & Co. analysts including Pinakin Parekh said in a report dated Sept. 26.

China’s steel demand rose 6 percent last month, down from the 13 percent gain in the first seven months from a year ago, the association said earlier this month. Baosteel said Sept. 18 that orders are falling.

Prices of hot-rolled coil, a benchmark steel product, are down 18 percent from a June record in China.

Spot iron ore prices in China are falling amid a price dispute between Chinese steelmakers and Brazil’s Cia. Vale do Rio Doce. Vale, the world’s largest supplier of iron ore, wants to increase annual contract prices for a second time this year.

China buys most of its spot iron ore from Indian mining companies.

source : bloomberg online news

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