After another big Friday fall iron ore prices are now down around 20% from the highs of January and early March.
The latest slide is thanks to a combination of Donald Trump’s tariffs and fears about the strength of Chinese demand over the rest of this year and into 2019.
Analysts say that investors should now watch for iron ore prices to continue sliding this week after futures prices fell towards $US60 a tonne and the contract index price dropped under $US65 a tonne to the lowest level this year.
The Metal Bulletin’s 62% Iron Ore Index on Friday was $US64.58 per tonne cfr Qingdao Daily change: down by $US2.60 per tonne or 3.8%.
Friday’s close was down 7.5% from the previous Friday when the price fell 4.2% to $US69.84.
After regaining the $70 a tonne level early last week, they turned down as Donald Trump announced plans for $US60 billion of tariffs on mostly high tech Chinese exports to the US, China replied with plans for $US3 billion of tariffs against of imports from the US.
Then on Friday the Trump administration said that the exemptions on imports of steel and aluminium would only apply to May – meaning Australia has not won a permanent exemption, and nor had other allies. But this ruled out any deal with China.
China’s Ministry of Commerce is considering imposing a 15% tariff on a list of US products that includes steel pipe and a 25% tariff on a second list that includes aluminium products, it said on Friday. A day earlier, the US said it would impose new tariffs on some $60 billion worth of Chinese imports.
The prices of the three major iron ore exporters – BHP, Rio Tinto and Fortescue Metals all slid on Friday on the ASX and will open weakly this morning and add to their already big March losses.
BHP shares fell 3.3% on Friday to take the month’s loss so far to 6.3%. Rio shares loft 4.3% and the shares are now down 9% while Fortescue shares fell 2.9% on Friday and have lost 10.2% so far in march and are now in correction territory (down 10% or more from the most recent high).
And watch also the shares of BlueScope Steel – they shed 5.8% on Friday which pushed them down 4.6% for March so far – they will go lower today with the ASX poised to open down nearly 1% lower after Wall Street’s big drop on Friday.
Gold and oil prices rose – so the likes of Newcrest, Woodside and Santos will enjoy a pick up today, but copper led other metals lower and that will hit miners across the board (BHP. Rio, Oz Minerals and even Newcrest).
