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Iron ore tumbles below $US55

Issued at 2015-08-24



Iron ore’s stubborn resistance in the face of market tumult has crumbled overnight as the commodity’s price sunk over 4 per cent.
 

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US53.30 a tonne, down 4.1 per cent from $US55.60 in the prior session.

It brings the commodity’s winless streak to seven sessions, though in the latest session it lost more than double what it had surrendered in the prior six combined.

Up until the latest dive lower, iron ore had enjoyed a period of relative calm, trading within a $US2 range for around three weeks.

However, the most volatile market action since the financial crisis has seen it belatedly join the latest commodities rout, though it remains well clear of its recent 10-year low of $US44.10 a tonne.

The move comes as steel mills near Beijing have shuttered as the Chinese government looks to temporarily reduce air pollution in the capital for two major events.

It also follows a disappointing full-year report from local iron ore giant Fortescue Metals yesterday, as the WA miner reported an 88 per cent slide in profit.

The group’s stock price dived 14 per cent on the news to lows last seen around the Global Financial Crisis.

Fortescue struck an optimistic note on iron ore demand, however, hopeful Chinese stimulus would prove an aid in the coming year.

“We’re seeing a lot of signs of stimulus coming into the market. I think there is a recognition that they need to stimulate the economy and that will flow through to steel demand,” Fortescue boss Nev Power said.

Meanwhile, the UK-listed stock of Fortescue’s larger rivals BHP Billiton and Rio Tinto has tumbled overnight, falling 9.2 per cent and 6.9 per cent, respectively, signalling another dark day on local markets.


Source: The Australian



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