At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US48.70 a tonne, down 0.8 per cent from its prior close of $US49.10 a tonne.
The commodity is now trading at its lowest mark since July 11 and its third lowest level in 10 years.
Indeed, July’s 10-year low of $US44.10 could soon be under threat with iron ore only seeing one positive day in the past 17 sessions, its worst run through an 18-month bear market.
Dire predictions from the Chinese steel sector have been a crucial factor in the recent descent, with traders fearful the expansions from Rio Tinto, BHP Billiton and Vale will occur through a period of stalling and potentially regressing demand. There’s also more supply set to come online from Gina Rinehart’s giant Roy Hill project, which is expected to deliver its first shipment in December.
Meanwhile, BHP has again warned price pressure will remain in the short- to medium-term, with prices below $US40 possible.
“In medium term, the next few years, it’s going to be much of same, we will continue to see very modest demand growth, and strong supply growth outpacing demand. That pressure will continue to gradually push it (the price) down — because the rate of displacement will get slower,” Alan Chirgwin, BHP’s vice president of marketing for iron ore, told Fairfax Media.
“What that means is that price will very much depend on the cost structures of the miners and their ability to preserve them and bring them down.”
Source: http://www.theaustralian.com.au/