This may be one of the biggest stories of the year.
From The Australian:
Iron ore price continues to slide as Chinese steel mills solder on
AN expected iron ore price floor that miners have long been flagging could be a long way off, with prices of the steelmaking ingredient continuing to slump amid talk that China is subsidising high-cost iron ore production.Rio Tinto's ADR's are trading down 3% in New York while the chairman of Fortescue makes a splash:
Prices of iron ore, Australia's biggest export, have fallen 30 per cent in the past two months and are down the same amount from the price on which the government's commodity forecaster bases its most recent forecast of $66.9 billion of 2012-13 iron ore revenue. The price collapse threatens to put a huge hole in federal government company and mining tax incomes and West Australian royalty earnings.
It has also sent share prices of iron ore miners Fortescue Metals Group and Atlas Iron plunging to three-year lows. Rio Tinto shares threatened to fall below $50 yesterday, down $1.21 to $50.54 compared with $68 six months ago.
Yesterday, the iron ore price at closely watched The Steel Index fell to a fresh 2 1/2 year low as Chinese steel mills continue to run down stockpiles and high-cost Chinese mines that were expected to stop keep digging ore.
Prices fell $US4.60 to $US94.80 in their 17th fall of the past 18 trading days.
The notion of a price floor at about $US120 a tonne, where high-cost Chinese production should have become unprofitable, has previously been pushed by Rio chief Tom Albanese and Fortescue chief Nev Power and others. But prices fell through that level about a month ago and have kept sliding....MORE