After slumping to US$77 per tonne earlier this week, iron ore has now fallen to a new five year low.
Last night the price fell to US$75.38 per tonne, a massive decline from its starting point of US$128.12 per tonne at the start of this year, equating to a 41 per cent price fall.
The commodity has been on consistent downwards trend this year, after it crashed into double digit territory in May from its historical triple digit highs, the first time it has fallen that low in two years.
It reached a new nadir last month after trading below US$80 per tonne, marking a 35 per cent loss since the start of the year, although it quickly recovered; however this new low is not expected to be the bottom of the trough with data from Morningstar predicting an eventual slide to US$70 per tonne.
This overnight price is the lowest point for the metal since June 2009, when it briefly sat at just over US$71 per tonne.
Speaking to Grant Thornton partner – audit & assurance, Brock Mackenzie, he told Australian Mining that current conditions had created a perfect storm for the metal, as there are high levels of supply expected to come online combined with a slowing growth in China.
The continuing price fall is due to weakening Chinese demand and a glut of the metal on the market as major project have come online and begun producing in serious quantities.
This problem is likely to be exacerbated by China’s recent decision to open its ports to Valemax size carriers, the largest non-LNG carrier ships, which have ore carrying capacities of between 380 000 and 400 000 short tons.