Iron ore set for worst month since October on slowdown

Bloomberg reported that iron ore headed for the worst monthly performance since October amid concern that slowing global economic growth and Europe’s sovereign debt crisis may curb demand for the raw material used in steelmaking.

Data from The Steel Index showed that iron ore with 62% content delivered to the Chinese port of Tianjin was little changed at USD 139.90 per tonne on January 30th 2012.

The price is up 1% this month after falling 31% in October and rebounding 11% in November and 5.8% in December

The slowest pace in three years
China, the largest steelmaker, boosted annual output by the slowest pace in three years in 2011 as the nation’s economy cooled last quarter, cutting demand from makers of houses and autos. European leaders are sparring with Greece over a second rescue program, leaving a Brussels summit yesterday with no accord over how to plug the nation’s widening budget deficit.

World growth is going to be a bit subdued
Mr Michael Heffernan a Melbourne based client adviser at Austock Securities Ltd said that “World growth is going to be a bit subdued, and very anemic in Europe, so there’s not going to be any push for stronger iron ore prices. You’re not going to see iron ore prices skyrocket.”

This month the International Monetary Fund lowered its estimate for global economic growth this year to 3.3% from a September forecast of 4% while the expansion next year will be 3.9%. IMF said that the euro area may shrink 0.5% as the US expands 1.8%