Iron Ore Spot Price Slumps to 2010 Low as Chinese Demand Slows

July 12 (Bloomberg) -- The spot price of iron ore delivered to China, the world’s biggest buyer of the steelmaking ingredient, slumped to its lowest level this year as steel production in the Asian nation slows.

The cost of 62 percent iron ore delivered to the port of Tianjin dropped for a 15th consecutive day, declining 3 percent to $118.10 a metric ton, according to The Steel Index. That’s the lowest since Dec. 29. The price has tumbled 37 percent since reaching a high for the year of $186.50 a ton on April 21.

Chinese iron ore buyers have been absent from the spot market for almost a month and are shunning purchases amid speculation of lower prices, Goldman Sachs JBWere Pty analysts said in a report dated July 9. The steel market, the biggest iron ore user, has weakened, Liu Guosheng, vice chairman of China’s Baosteel Group Corp., said in Shanghai last week.

Vale SA, Rio Tinto Group and BHP Billiton Ltd. are the biggest exporters of iron ore, making up about two-thirds of seaborne supply. This year they moved away from a 40-year custom of pricing supplies annually by signing quarterly contracts based on the average cash or spot price over three months.

Steel output in China dropped last month and is likely to fall again this month, Goldman Sachs JBWere said in its report. China is the world’s biggest steel producer.