Iron ore declines

Shanghai/London
Spot iron ore fell to a fresh 5-1/2 year low on Tuesday, on further evidence Chinese steel mills are cutting output, curbing demand for the raw material, and as low-cost producers increased output.
China eliminated 31.1 million tons of steel production capacity last year, higher than expected, a senior official of the industrial ministry said, as Beijing seeks to ease overcapacity and improve air quality. Beijing has also set a target of eliminating 27 million tons of steel output this year. Benchmark 62 percent grade iron ore for immediate delivery to China fell 0.8 percent to $62.80 a ton, its lowest since May 2009, according to data compiled by the Steel Index.
Iron ore futures for May delivery on China’s Dalian Commodity Exchange fell 0.2 percent to 470 yuan a ton, down a fifth straight day.
“We maintain a longer-term bearish view on iron ore. The combination of weakness in China’s steel industry and ongoing ramp-ups of low cost supplies is pulling iron ore prices lower,” said Carsten Menke, Commodities Research Analyst at Julius Baer.