Iron ore price slumps 4.1pc
The price of Australia’s most valuable export has dropped below $US60 a tonne for the first time since June.
Iron ore prices shed 4.1 per cent overnight, dropping below $US60 a tonne for the first time since June.
The spot price was today at $US59.10 a tonne.
It comes amid market concerns about steel mill closures, according to ANZ Australian Economics head David Plank.
“While this has resulted in strong raw material prices in the past, the market appears to be taking a ‘glass half empty’ approach this time,” he said.
Iron ore stockpiles at Chinese ports increased by 0.5 per cent last week, according to Steelhome, up from the previous week’s 1.8 per cent gain. Mr Plank said rising iron ore inventories may be the reason for the dramatic price drop.
Last month, Goldman Sachs forecast the price of iron ore would drop below $US60 by the end of the calendar year, as it predicted China would impose environmental restrictions on steel production.
“The July and August iron ore rally illustrates the impact of policy anticipation,” a Goldman Sachs report said.
“Where iron ore prices go from here depends on how strictly the environmental cuts will be implemented in Q4, relative to expectations.”
The iron ore price went as low as $US62 a tonne in July before hitting $US78 a tonne in August.
Goldman said that despite the potential policy changes, it expected that healthy demand would continue.
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