Johannesburg - Shares of South African iron-ore producers Assore, Kumba Iron Ore and African Rainbow Minerals are down on oversupply concerns.
China's statistics bureau data shows iron ore production is up 12.3 percent from a year ago to 122.4 million tonnes, sending Assore and African Rainbow down 2.4 percent, while Kumba has lost 2 percent.
“Iron ore is expected to come under pressure for the fact that China has stocked up so much iron ore. A couple of years ago when the price was going up these companies invested so much in iron-ore operations that they are now sitting with too much supply and there is no demand,” says Martin Lentsoane, a trader at Lehumo Capital.
The annual global seaborne iron ore market is about 1.2 billion tonnes, with China accounting for 820 million tonnes, or about 68 percent, in 2013.
Up until recently the market has been in deficit, helping to explain why spot Asian iron ore prices went from $59.60 a tonne when Steel Index begin compiling data in November 2008, to as high as $191.90 a tonne in February 2011.
Prices have been more modest since, falling from end-2013 values of around $140 a tonne as increased supplies hit the market and questions have been raised over Chinese demand.
The decline so far this year has been more than 23 percent to $102.80 a tonne on Friday. - Reuters