The drop in margins in China hits the iron and affects the CAP

Iron ore is being beaten as the profitability of Chinese steel mills collapses, which has led steelmakers to reduce their consumption and plunged the raw material into a sudden liquidation after the fall of crude oil and copper. All of them have an impact on the CAP that goes public.

Futures fell 6.5% to 62.75 USD. per ton on the Singapore Stock Exchange and are trading at 63.30 USD at 16:14 local time, in view of the weaker closing since July, after the collapse of the most active contract by nearly 7% the week last. On the Dalian Commodity Exchange, futures contracts have been reduced to the daily limit.

The withdrawal of iron ore will hurt mining companies such as BHP Group, Rio Tinto Group and Vale SA and coincides with the rejection of major industrial products by investors are facing speculation of a slowdown in the global growth in 2019. The fall was caused by the decline in steel prices in China, caused by fear of an oversupply this winter, which hurt the profitability of the market. Steelworks

In Chile, the impact is perceptible in the CAP, since the share fell by nearly 1% on the Stock Exchange of Santiago, for which it is listed at $ 6,370.

Volatility

] The decline is the last sign of the resurgence of volatility in the world iron ore market after price flattening between March and October, before a brief increase.

Margins "I have fallen to the point of altering the strategies of buying steel mills," said Tomás Gutiérrez, strategist at Kallanish Commodities Ltd. The steel companies "are in no hurry to buy and are more focused on costs only on the increase in production, "he added, adding that steel could still fall.

In Shanghai, the rebar bar registered last week has recorded its longest negative sequence since 2016, and a measure of the profitability of Chinese steel producers plunged to its lowest level since May 2017, according to a Bloomberg Intelligence index.Steel prices have also fallen suffered from a lack of economic stimulus in China, said Gutiérrez.

Iron ore suffered pressure after the fall of oil and other raw materials while the investors weigh the perspe ctives slowing global growth in 2019 and changing supply dynamics in the energy markets. Brent fell 12% last week. As for copper, its prices in London have fallen by 15% in 2018.

In China, the decline of iron ore has been marked by a new series of reductions in industrial activity in winter pollution . This year, plant restrictions cover a larger area, but they are also more flexible, prompting badysts to question whether this would have a greater or lesser impact.

Spot iron ore prices They were also affected. The reference material containing 62% iron fell to 69.15 USD per ton Friday, its lowest level since 5 October. High-density ore was also in the line of sight, dropping 8.3% last week and reaching its lowest level since June as steelmakers sought to cut costs.