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

The good performance prevailing today in world markets in the face of less uncertainty related to news from Europe with Brexit and Italy, and the optimism generated by the topics discussed at the G20 summit were not enough for the Chilean stock market.

The IPSA S & P / CLX Index fell 0.14% to 5133.42 points while it was known today that Morgan Stanley had joined the good optimism of JPMorgan and had also recommended Chilean actions. News that was not enough to change the trend that had emerged early for the selective And it is that the PAC weighed on the decline in the performance of the index to 2.88% because of the bad moment that saw iron.

The ore is bulldozed while the profitability of the Chinese steel mills collapses, which has led the steel companies to reduce their consumption and plunged the raw material into a brutal liquidation following the fall oil and gas. copper

Futures fell 6.5% to 62.75 USD. a ton on the Singapore Stock Exchange and are trading at $ 63.30, heading to the lowest close since July, after the The most active contract collapsed by nearly 7% last week. 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. steel mills

Volatility

This decline is the latest sign of a resurgence of volatility in the global iron ore market after prices were ironed between March and October before a brief increase.

Margins "have been reduced to such an extent that they are changing the steel companies' purchasing strategies," said Tomás Gutiérrez, strategist at Kallanish Commodities Ltd. Steelmakers "are in no hurry to buy and are more focused on cost than on increasing production," he said, adding that steel could fall further.

In Shanghai, the rebar bars recorded their longest set of setbacks. since 2016, and a measure of profitability of Chinese steel producers hit its lowest level since May 2017, according to a Bloomberg Intelligence Index. Steel prices have also suffered from a lack of economic stimulus in China, said Gutiérrez.

Iron ore was under pressure following the collapse of oil and other commodities as investors weighed down the outlook for slowing global growth in 2019 and the US. evolution of the dynamics of the supply on the markets of the energy. 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.