The iron ore spot price has collapsed from $135 per ton to $111 per ton in just two weeks thanks to steel de-stocking, despite a broad-based commodities rally that began in July. Unlike copper (JJC, quote), iron ore can’t be stored and in an overcapacity situation, producers have to sell distressed stock.
As traders watch risk aversion flow from China to Europe, copper prices have taken a big hit, falling all the way to $3.342 a pound on fears the European sovereign debt crisis is getting worse and not stabilizing as officials hoped.
The China trade figures for June are out, and they show a trade surplus of $31.7 billion. Exports grew by 11.3% over the past year while imports increased by 6.2%.
With Chinese and European manufacturing data coming in lighter than expected, the euphoria from the EU summit banking decision on Friday dissipated in Monday commodities trading.
The European finance ministers’ bailout plan continues to wreak havoc on the commodities market with copper prices trading at a five month low. Markets remain suspicious of the €100 billion ($125 billion) bailout of Spanish banks.