Seaborne iron ore prices continued their slide towards $70/tonne on Wednesday despite more spot market activity. With steel futures still weak and iron ore prices still incentivising high output, only an upturn in steel demand can halt the decline.

The Kallanish index for 62% Fe Australian fines dropped another $0.95/tonne to $74.42/dry metric ton cfr Qingdao, the lowest level since 2 February. 170,000 tonnes of PB fines sold in tender at $73.42/t with a laycan in 4-13 April, while on globalORE 280,000t of Carajas fines shipped on 24 February sold at $92.5/t. COREX meanwhile saw 130,000t of Newman fines trade at a floating price. On the Dalian Commodity Exchange May iron ore settled flat from Tuesday at CNY 520/t ($82/t), while on the Singapore Exchange April 62% Fe futures settled down $1.15/t at $72.40/t.

A core reason why iron ore prices can not be sustained was outlined by Macquarie in recent report. It has the marginal price of iron ore at around $65-70/t, still below current levels. A price in the high $60s is necessary to maintain 92 million tonnes/year of low grade iron ore supply in the market, it says. Currently almost all major seaborne iron ore suppliers are profitable. It noted however that Atlas Iron and the Asia Pacific division of Cliffs both reported Ebitda losses in the fourth quarter of  2017. Accounting for 20m t/y of low grade seaborne iron ore supply, these operations are now on the front line of their cost curve.