Iron ore futures slumped on Thursday following some profit-taking activities as market participants turned cautious.
The iron ore market has seen great volatility, pushing towards $100 on supply concerns following disruptions in Brazil as well as strong demand from China.
The Dalian Exchange issued a notice earlier this week, urging member brokerages to remind their clients to ‘participate rationally’ and trade within compliance. It also vowed to strengthened supervision and take strong actions against violation of rules.
This, culminated by banks’ warning that iron ore is likely to drift lower from current levels, led to market participants cashing in and closing their long positions. Despite the current woes, UBS Group AG expects a recovery in Brazilian miner Vale’s output and forecasts iron ore price to be at $86 a tonne in 2020.
Meanwhile, Citigroup Inc. raised its third quarter outlook but maintained $74 a tonne for the fourth quarter, warning a glut will return.
June contract was seen slumped from 100.1 to 98.65 during London morning. July was seen trading down to 95.3 despite trading as high as 99.3 in Asia. Q3 also traded 93.5 and 93.2.