Iron ore’s rally shows signs of cracking amid doubts about China’s demand
Singapore — Iron ore’s rally is showing signs of cracking. After a drumbeat of warnings that the gains won’t last, the commodity is heading for the biggest weekly slump in almost four months amid rising concern about the underlying strength of demand in China at a time of still-rising supplies. The surge "was premised on optimism about demand", Caroline Bain, chief commodities economist at Capital Economics, said in an e-mail. "As such, we think the recent decline reflects some doubts about China’s demand." Bain’s predicting a retreat to $45 a tonne by year-end, 48% lower than Thursday’s price and levels last seen in February 2016. Iron ore jumped in 2016 and extended gains this year as stimulus led to sustained demand from China’s mills, prompting record imports that helped swell port inventories to all-time highs. While the surge boosted miners Rio Tinto and Vale, it also triggered predictions of a pull-back. Among those flagging potential weakness are banks, including JPMorgan Ch...
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