Iron ore bear market worries as price drops again
Iron ore prices continue to drop, shedding 7.4pc to $US63 a tonne overnight — the lowest mark since mid-July.
Iron ore prices continue to drop, shedding 7.4 per cent to $US63 a tonne overnight, the lowest spot price since mid-July.
Prices have now dropped by over $US10 a tonne over the past fortnight. On September 11, the price was at $US73.6 a tonne.
ANZ senior economist Daniel Gradwell says he expects prices to drop further, but stabilise around $US60 a tonne.
“The recent bear market in iron ore extended as supply concerns remained front of mind,” he said.
Analysts say the dip follows weakness in the steel market.
“Concerns around an abundant steel and iron ore supply have been in play for a while, while the Steel Business Briefing has just reported Chinese mills have cut hot rolled coil prices due to weakening demand,” IG chief market strategist Chris Weston said.
ANZ analysts Daniel Been & Giulia Specchia released research yesterday indicating they don’t expect weak iron ore prices to have a long term effect on the Australian dollar.
“The impact of the dip in iron ore prices will still be contained,” the research said.
They said that while the iron ore price remains vulnerable to further falls as Chinese demand for steel puts pressure on prices, they expect prices to stabilise over the medium-term.
“Our commodity strategist is not bearish on the medium-term outlook and expects iron ore prices to stabilise around the mid-sixties over the medium-term,” they said.