Iron Ore’s Bear Market May Deepen as Clarksons Forecasts $40

It’s the first time since April that it’s traded below US$50 while it has now fallen nearly 25% since peaking near US$66 a tonne less than a month ago. “The slump in equities reflects a lack of confidence in China’s economy, which damps the demand outlook for industrial commodities”.

However, with the price of iron-ore falling since the start of this year, a debate had emerged on whether the industry or government policy-makers could have acted to ensure that Australia could have maintained a foothold in a higher priced world.

BHP, for its part, is shifting its focus away from iron ore and coal to copper and potash, resources that have a greater consumer focus.

The extended collapse in prices has eroded gains in the second quarter of the year, when iron ore climbed from a decade-low as producers’ shipments missed expectations.

MANILA, July 8 (Reuters) – Chinese iron ore futures plunged almost 8 percent to a record low on Wednesday as the selloff in China-traded commodities showed no sign of letting up amid a bearish view on the economy and following steep losses in equities.

Iron ore’s return to a bear market highlights that the same factors of surging supply and stalling demand growth, which dragged prices to a decade-low early April, remain at the forefront.

Benchmark iron ore for immediate delivery to the port of Tianjin in China was last trading at $US52 per tonne, a 3.9 per cent fall from its previous close. “And Australia’s experimentation with export controls in the 1970s and 1980s saw Japanese investment support Brazilian iron ore capacity instead of Australian”.

Australia-based BHP Billiton mines, extracts and produce aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium, and oil and gas.

“Supply is now outpacing demand, pointing to renewed price pressure”, said Gordon Johnson, an analyst at Wolfe Research LLC in New York.

The juniors’ share prices are also suffering a blow as the iron price loses more ground.

However the company warned that it was not protected beyond the end of December and the ability to lock in prices and what they would be was unknown.

Fortescue Metals Group is getting its breakeven down towards $US40 a tonne, so it won’t want the price to fall much further.

The Minerals Council report continues in this vein, offering solid and plausible reasons for what has happened, but skirting some of the more hard issues facing the iron ore industry.