Standby for more selling pressure in major miners on the ASX today after a 4% slide in the price of iron ore on Friday night.
That was after the marker price for the standard globally traded iron ore – Pilbara ore with 62% iron oxide content delivered to Tianjin port in Northern China – dropped 4.1% on Friday to $91.80 a tonne.
The slide added to what was a miserable month for the key steelmaking material, with the price down nearly 13%.
It is now less than $US5 a tonne from the low in the current global pricing and trading system of just under $US87 a tonne reached in September 2012.
That was the lowest price for 20 months and means the iron ore prices have has now dropped every month since December.
It will mean falls today in the price of shares in BHP Billiton, Rio Tinto, Fortescue and other small ore producers such as Arrium and Atlas.
But news on the weekend of a cut in reserve requirements for some Chinese banks to enable them to increase lending might help ease the stockmarket pain of the slide in iron ore prices.
In Australia on Friday, Rio Tinto shares dropped 1.3% to $59.45, BHP Billiton shed 1.3% to $37.245 and Fortescue Metals was 2.8% lower at $4.435.
But in London on Friday night, Rio shares dropped 4.1% and BHP shares fell 3.7%. Some of that was catch up to the falls in Australia earlier in the day, but most of the drop was in reaction to the further weakening in the spot price.
For May, BHP shares did well in Australia dropping just 1.3%, while Rio shares were only down 2.5%.
But pure play Fortescue shares plunged 12.7% to $4.41 and felt the full impact of the drop in iron ore prices.
And the Aussie dollar ended at 93.10 USc, when it should have really fallen back under the 93c level in the wake of the sharp fall in the ore price.
While May was mostly a good month for markets, gold and the major grains all fell, but iron ore stood out with the 12.9% slump up to the close of business on Saturday morning.
That left the price down 32% from the start of the year.
Seeing the price only slipped under $US100 a tonne two weeks ago, the price is down more than 9% the last fortnight.
Bloomberg points out that the 32% slide in iron ore prices this year compares to the 2.8% rise in the Standard & Poor’s GSCI Spot Index of 24 commodities and the 3.1% rise for the MSCI World Index of equities.
As a result of the slide, shares in Fortescue are down more than 24% this year, while the price of shares in Vale, the huge Brazilian iron ore exporter, are down more than 20%.
Shares in BHP Billiton and Rio Tinto have also fallen, but not as much as Forestcue shares.
Elsewhere in commodities, gold prices lost 3.5% for the week and 3.9% for the month — their biggest weekly and monthly declines of this year.
Comex August gold in New York fell $US11.10, or 0.9%, to settle at $US1,246 an ounce on Saturday morning, our time, the fifth straight session loss.
Comex silver prices also suffered a weekly loss of 3.8% and monthly decline of 2.5%. July silver shed 33c, or 1.8%, to end at $US18.68 an ounce early Saturday.
WTI July crude futures fell 87c, or 0.8%, to settle at $US102.71 a barrel in New York.
The futures price lost 1.6% for the week, but rose 3% on the month.
In London, July Brent crude fell 56c, or 0.5%, to end at $US109.41 a barrel, losing around 1% on the week, but adding 1.8% on the month.
Comex copper for July delivery slipped 2c, or 0.7%, to $US3.12 a pound, with prices down 1.4% for the week, but up 3.2% for the month.
And grains were mostly weaker over the month. Wheat futures for July delivery on the Chicago Board of Trade fell 0.8% to close at $US6.2725 a bushel on Friday night.
Wheat futures prices dropped 13% in May, the biggest fall since September 2011. That will mean weaker income for our wheat farmers as the Aussie dollar hasn’t fallen enough to offset the slide in prices.
Corn futures for July delivery eased 0.8% as well to $US4.6575 a bushel. Corn futures dropped 10% in May, the biggest monthly fall in the past year.
And soybean futures for July delivery fell 0.4% to $US4.9325 a bushel on Friday night. That left the price down 1.3% for May.
