THE iron ore price has sunk to a new five-year low overnight as former Rio Tinto boss Tom Albanese said an imminent recovery was a longshot.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US77.70 a tonne, down 1.1 per cent from its previous close of $US78.60 and its lowest level since September 2009.
The month of September has been a harrowing one for the sector, with just three positive trading days and a net loss of 11.5 per cent from levels above $US87 a tonne on September 1.
It leaves the commodity down about 43 per cent on the year.
The latest fall was driven by rising fears surrounding Chinese demand as industrial profits data showed softness over the weekend.
It also came as former Rio chief executive Tom Albanese warned of further pain for suppliers in an interview with Bloomberg TV.
“(Iron ore) is likely to stay weak for a while,” Mr Albanese, who now heads up India’s Vedanta, said.
“In this environment, you now have supply probably in excess of demand. It doesn’t take much to drive prices lower.”
While Mr Albanese was cautious about the near-term, he remained confident about commodity markets recovering in the longer-term.
“What we are seeing right now is a continued slowdown in China from where we were … a couple of years ago,” he told Bloomberg.
“As long as what we’re seeing in China is only a slowdown toward a longer-term GDP of 6 to 7 per cent range, then the commodity and metals markets will be in good shape.”
Source:The Australian
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