Industrial metals miners fall as iron ore's record rally stalls
- Iron ore futures plunge (SCO:COM) amid growing concerns about inflation and Chinese moves to try to control the surge in commodities prices.
- The most actively traded iron ore contract on the Dalian Commodity Exchange for September delivery closed -7.5% to 1,217 yuan/metric ton ($188.66), after prices jumped 23% in the month of May alone.
- Shares of major global industrial metals miners trade broadly lower: RIO -3.4%, BHP -2.4%, VALE -1.3%.
- Other relevant tickers include OTCQX:AAUKF, OTCQX:NGLOY, OTCPK:GLCNF, OTCPK:GLNCY, OTC:ANFGF.
- Bloomberg reports the likely trigger for the iron ore selloff was an admonition from China Premier Li Keqiang urging the country to effectively deal with the commodity price surge and its impact.
- The slump may have been exacerbated as many traders in Singapore are not at their desks because of a local holiday.
- "High iron ore prices in early 2021 are unsustainable, but market fundamentals remain strong for 2021 based on supply constraints and a lack of major expansion projects in store for the coming years,"says Moody's senior VP Barbara Mattos.
- Reports that China has asked LNG purchasers to stop buying new Australian cargoes "will further stoke fears of restrictions, [but] given the importance of this trade flow to both countries, we do not think an iron ore ban is likely or practical," BMO analyst Colin Hamilton comments.
- Iron ore futures rallied to new record highs earlier this week, as strong Chinese demand leaves supplies stretched.