IRON ore futures in China slumped more than 7 percent yesterday, extending losses to a fourth session in a row, as stocks of the steelmaking raw material at the country’s ports rose to the most in more than two years.

    Inventory of iron ore at major ports in China, the world’s top importer, hit 111.55 million tons as of Friday, the highest since September 2014, according to data tracked by industry consultancy SteelHome.

    Spot iron ore prices have surged 87 percent this year, snapping a three-year decline, mainly due to the strength in China’s steel market. The spot benchmark touched US$83.58 a ton Monday last week, the strongest since October 2014.

    But analysts say with steel prices largely spurred by China’s campaign to address excess capacity, iron ore demand could weaken eventually.

    “Iron ore prices have remained disconnected to the fundamentals in our view since late October, ranging from US$60-US$83 per ton despite clearly abundant supply of iron units,” Macquarie analysts said in a note.

    “We still believe iron ore supply remains abundant with prices above US$60 per ton, and with Chinese mine costs lower in U.S. dollar terms given recent yuan depreciation, we do not see a return of cost inflation in iron ore mining which justifies prices anywhere near current levels.”

    The most traded iron ore on the Dalian Commodity Exchange slid 7.2 percent to close at 560 yuan (US$81) a ton. That was a tad off the day’s trough of 559 yuan, the lowest since Dec. 2.

    Construction steel product rebar on the Shanghai Futures Exchange dropped 5.7 percent to end at 3,171 yuan per ton, also slipping for a fourth consecutive session.

    Weaker futures could drag spot iron ore back below US$80 a ton if bids consequently drop in the physical market, traders say.

    Iron ore for delivery to eastern China’s Qingdao port was nearly unchanged at US$81.49 a ton Friday and was also flat for the week, according to Metal Bulletin. (SD-Agencies)