Iron ore price suffers biggest fall in four years
Stocks for some of the largest mining companies in the world were battered on March 10 when the price for iron ore suffered its largest one-day fall in more than four years.
The price slipped 8.3 percent to $104.70/t according to data from The Steel Index. The drop is price has been attributed to an 18 percent fall in Chinese exports in February.
Iron ore is a key ingredient in steelmaking and is the top revenue earner for Australia’s large mining concerns, BHP Billiton and Rio Tinto.
The spot price has fallen 22 percent this year and the companies took a battering during trading sessions on March 10 in Sydney and London as investors weighed the impact on their profitability.
The disappointing China trade data weighed on other commodities, including copper and oil, although China’s imports of most were up on the year. The weak exports suggested China’s commodity import demand could shrivel in coming months as end-users draw down swollen inventories.
China’s exports fell 18.1 per cent in February from a year ago, when the market had been expecting an increase. The dismal numbers followed a series of factory surveys since the start of 2014 that have pointed to weakness in economic activity as demand has faltered at home and abroad.
Steel demand in China, the world’s biggest consumer and producer, has been weak since the start of the year as a slowing economy curbs demand for the building material.
Construction activity, which typically picks up from March, is unlikely to spur a strong recovery in demand for steel as Beijing pursues economic expansion that is driven less by investment and more by domestic consumption.
A slump in iron ore to a three-year low of $86.70 in September 2012 shut many high-cost mines in China and forced global miners to rethink expansion and focus on cost cuts.