Australia’s iron ore sector dominated by the likes of BHP Billiton, Rio and Fortescue, face another whacking today after global prices slid sharply yesterday and overnight to under the $US60 level.
Iron ore dropped nearly 9% on Wednesday, almost halving Monday’s record near 19% surge.
Ore with 62% iron content fell 8.8% to $US58.02 a dry tonne, according to the Metal Bulletin. The price had eased 0.2% on Tuesday.
And according to The Steel Index, iron ore fell 6% to $US59.6 a tonne.
The news had no impact on the Aussie dollar which topped 75 US cents overnight (hit a high of 75.28 cents). Higher oil prices helped push the currency higher, though gold was weaker. The share price futures contract had the market up 10 points.
Oil prices jumped to their highest level since December, despite another rise in US oil stocks – the price of US crude was trading above $US38.10 a barrel this morning in Asia.
Bloomberg said the fall yesterday was preceded by losses on futures in Singapore and China.
Rio Tinto and BHP Billiton, which fell 9.4% and 8.5% respectively in London on Tuesday night and they fell here in Australia yesterday, with BHP down 1.9% to $17.86 and Rio Tinto down 2.1% to $44.30. Fortescue Metals shares fell nearly 3% to $2.71.
BHP shares rose overnight in London Wednesday, but Rio shares eased a touch.
Monday’s surge triggered euphoria in some areas as the rise took the gains since the lows of around $US38 a tonne in December to 70%.
There were stories yesterday and today that the Federal Government had already banked the rise in iron ore prices and was planning a give away budget in May.
The rally prompted the likes of Goldman Sachs to say that the gains wouldn’t last, citing slowing steel demand in China and rising mine supply. Goldman Sachs called it “short lived”.
The global iron ore market remains heavily oversupplied, demand in China is faltering and there’s a glut of steel around the world.
