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Iron ore price tumbles for third day

Issued at 2015-10-15



The price of iron ore has slumped 2 per cent overnight as investors fret about rising supplies at a time when Chinese economic data continue to disappoint.

At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US53.20 a tonne, down 2 per cent from $US54.30 a tonne in the prior session.

The commodity has now lost almost 5 per cent in three sessions, with the weakness caused in part by soft data out of Beijing this week. Official numbers have shown a sharp 20 per cent slide in imports as well as a weaker-than-expected reading on inflation.

The falls could also be in part explained by this week’s dip in oil prices, which reduces costs for producers and consequently lowers the price at which supply could potentially come out of the market.

Rising production from major players in the sector has driven an 18-month bear market and it threatens to get worse in the coming 12 months as Vale, Rio Tinto and BHP Billiton expand while Gina Rinehart brings the mammoth Roy Hill project into production.

“By the end of this year, there will be additional iron ore coming from Australia, from Brazil,” Arnoud Balhuizen, head of marketing at BHP, said earlier this week.

“Our expectation is that the iron ore market cost curve will continue to flatten and continue to come under pressure.”


Source: The Australian



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