At the end of the latest offshore session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US69.80 a tonne, down 1.1 per cent from its previous close of $US70.60 a tonne, but still 6 per cent above the five-and-a-half-year low of $US65.70 reached just prior to Christmas.
The fall below $US70 a tonne casts doubt over the latest rebound in the commodity’s price after a horror 2014 where several minor recoveries quickly fell flat.
Iron ore lost about 50 per cent over the course of last year, but a near 10 per cent lift off recent lows to levels around $US72 a tonne had raised optimism for a better 2015.
The latest losses come as investors continue to worry about the Chinese economy, with concerns that demand growth will continue to stall over the coming 12 months as Beijing looks to restructure the world’s second largest economy.
China is the world’s largest consumer of iron ore and any further signs of softening demand will cause pain for the commodity as major suppliers such as Vale, Rio Tinto and BHP Billiton continue to ramp up production.
The latest decline comes as former Morgan Stanley strategist and well-known bear Gerard Minack told Fairfax Media the price of iron ore was poised to halve in US dollar terms.
“In the boom all the other commodities went up six- or sevenfold, while iron ore went up 15 times.
“So, sure, it’s halved already, but it has further to go.”
Source: The Australian
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