The price of iron ore has fallen for a second consecutive session as doubts are cast over the strength of the Chinese steel sector.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US64.50 a tonne, down 0.8 per cent from its prior close of $US65.00 a tonne.
The reversal in the commodity’s fortunes follows an eight-day winning streak over the past fortnight as Chinese port stockpiles dropped to an 18-month low.
The declining stockpiles led to heavy demand for high-grade product, largely the domain of Australian producers.
However, the latest weakness has coincided with a slip in steel prices to their lowest level since April, which doesn’t bode well iron ore given its position as a key steel-making ingredient.
“Looking ahead, steel production will remain sluggish during the summer, and July steel price cuts will dampen the incentive for production,” Argonaut Securities analyst Helen Lau said, according to Reuters.
“Iron ore prices will be under pressure over the short term.”