Iron ore sinks to 2-month low
The price of iron ore has lost ground to just over $US55 — precariously above government forecasts.
The iron ore price has slipped to a two-month low, hovering precariously above the federal government forecasts.
Iron ore lost 0.4 per cent to $US55.30 a tonne overnight, from $US55.50 the previous day.
But Australia’s diversified mining giants shook off the falls in London trade, buoyed by rising oil prices.
Rio Tinto rose 3.5 per cent, while BHP Billiton added 3.7 per cent, gains that could give the miners a boost when the ASX opens.
Iron ore is now trading at its lowest point since July 20, when it settled at $US55.10.
Since reaching a three-and-a-half month peak of $US61.80 a tonne in mid-August, iron ore has now shed 10.5 per cent as traders come to agree with analysts that such a price is unsustainable.
With supply continuing to outstrip demand, analysts have spent months calling for the commodity to fall into the low $US50s or $US40s.
But the steelmaking ingredient managed to defy these bearish predictions until the recent G20 summit in China sparked some volatility in prices, with local governments restricting industrial activity to clear the air.
Traders have also been hesitant to take on risk at some moments over the past fortnight, as equities fell sharply on worries about a looming interest rate hike in the US.