The price of iron ore has fallen below $US70 a tonne for the first time since 2009.
Benchmark iron ore for delivery to the port of Tianjin in China was trading at $US68.60 a tonne yesterday.
This is a drop of 2 per cent from its previous low of $US70 a tonne.
“The biggest problem is on the supply side as majors like BHP and Rio are pushing huge volumes into the lacklustre demand environment,” an analyst at Sanford C. Bernstein & Co told Bloomberg.
“To me $65 feels like a floor.”
The Bureau of Resources and Energy Economics (BREE)is expected to cut its official iron ore forecast next month.
While the group said iron ore price volatility is not uncommon, this difference this time is the oversupply flooding the market.
In Australia alone over 200 million tonnes of new ore has begun export at the same time as China stopped stocking up on the commodity like it used to.
Over the next 5 years, iron ore prices are projected to average between US$90 and US$95 a tonne.