Iron ore dips as stockpiles lift

The iron ore price has edged lower as stockpiles at Chinese ports increased to their highest level since December 2014.

 

The iron ore price has eased slightly after last week’s run of gains as data showed another increase in stockpiles at Chinese ports.

Iron ore slipped 0.7 per cent to $US58.80 in the most recent session, according to The Steel Index, compared with $US59.20 the previous day.

Stockpiles lifted to their highest level since December 2014 last week, increasing 0.4 per cent to 106.05 million tonnes, Bloomberg reported. Over the month, inventories added 4.5 per cent.

The increase in inventories appears surprising as prices remain resilient, but Goldman Sachs last week noted that stockpiles are still at historically low levels.

The bank upgraded its near-term price forecasts to $US50 over the next three months and $US40 over the next six, but remains more bearish than consensus over the longer term, with a forecast of $US35.

Several other banks expect the price to fall as new supply comes online, outpacing global demand, but other forecasts bottom out around the $US40 a tonne mark.

Traders are also digesting the news of provisions made by BHP Billiton and Vale for the clean-up of the Samarco mine in Brazil, following last year’s deadly tailings dam failure.

The mine is not expected to restart this year, which will continue to weigh slightly on the output of both joint venture partners.

In London trade, BHP Billiton shares fell 1.7 per cent, while Rio Tinto added less than 0.1 per cent.