Investors are ditching iron ore miners as the price of the commodity tumbles to a new five-year low of $US70 a tonne.
This is the third record low in as many days for iron ore which has now shed 50 per cent of its value since the start of the year.
The week’s free fall has spelt more bad news for iron ore miners.
Fortescue Metals Group shares have fallen by 55 per cent since February and closed $2.74 yesterday, a level not seen since the global financial crisis.
BC Iron and Mt Gibson also saw double digit percentage falls and are trading at 56 cents and 38 cents respectively.
BHP Billiton and Rio Tinto were cushioned from major sell-offs because of their lower operating costs and diversified portfolios, but fell by 2 per cent yesterday.
The fresh low comes as data out of China shows the average price of new houses slumped for the sixth month in a row.
Deltec chief investment officer Atul Lele said this means that housing supply is outstripping demand which is bad news for the country’s steel sector, AFR reported.
“We believe it represents the biggest risk to the Chinese and global economy,” Lele said.
Citigroup predicts iron ore will fetch $US72 a tonne for the first quarter of 2015 and crash to lows of $US60 a tonne in the third quarter before lifting again slightly by the end of the year.
The slump in prices has already seen two iron ore operations in Australia close with fears there are more to come as break-even costs are being tested.
Western Australia's budget is also expected to have a multi-billion hole where iron ore royalty payments used to live as a result of the falling price.
Barnett said he does not want to see iron ore mining in WA to revert to a duopoloy.
"By their own admission, the major companies are pushing increasing volumes on a month to month basis into the market, very conscious that is contributing to price falls in an already depressed market and very conscious by those quotes as an example of the impact this will have on smaller iron ore producers," the premier said.
"I'm not sure where Colin is coming from in that given that we've been very clear in our plans and our expansions are approved by government," Walsh said.