An 8.3 per cent fall in the price of iron ore hammered Australian miners yesterday as investors looked to unload stocks.
Shares in Rio Tinto fell 5.8 per cent to $61.20 while BHP was down 4.1 per cent to $36.16.
However Fortescue Metals Group, which is more exposed as the only undiversified company of the major iron ore producers plunged 9.4 per cent to a five-month low of $4.92, wiping $1.6bn wiped from its value.
The bear market comes as the price of iron ore fell to $US104.70 a tonne yesterday, a 22 per cent slide from the same time last year.
Weaker than expected trade data from China on Saturday led the fall with concerns mounting around the Chinese economy.
China posted a trade deficit of $US22.98 billion ($A25.32bn) in February, compared with a surplus of $US14.8bn in the same month last year.
Data shows exports were down 18.1% year-on-year, down from double digit growth in January, while new bank loans more than halved.
Stockpiles of ore at Chinese ports are at record levels after an aggressive restocking program and fears the market will not be able to absorb a new wave of supply has some analysts predicting prices could fall even further.
“The iron ore and coking coal markets are clearly being impacted by deteriorating sentiment in the Chinese steel sector," ANZ commodities analysis head Mark Pervan said.
"Concerns around steel capacity closures, tight liquidity conditions, and rising environmental costs are paring back the near-term demand outlook/"
Last week China's Finance Minister, Lou Jiwei, said growth will slow to 7.2 per cent this year, SMH reported.
"Mills are more reluctant to buy iron ore in this situation, and we will see iron ore continue to drop in the next few days. We may break $US100 in a very short time," Reuters quoted a Shanghai trader as saying.
However others have said economic data out of China is traditionally slower around this time of year due to the Lunar New year with some labelling the sell-off seen yesterday an “over reaction”.
"We're going to see these kinds of big movements up and down [in the iron ore price],'' MineLife senior resource analyst Gavin Wendt said.
''China accounts for about 60 per cent of the world's consumption of iron ore. When a commodity is so dependent on a one specific buyer, you get significant price volatility.'
Others say with new supply from expansion plans and new mines set to flood the market, even a marked increase in steel production will not combat oversupply.
''With 2014 and 2015 facing seemingly inescapable surpluses, the question becomes the price needed to force sufficient production curtailments to bring the market back into balance in 2016,” Citi commodities analyst Ivan Szpakowski said.
Coking coal prices have also taken a hit, trading below $120 a tonne, compared to more than $160 a tonne this time last year.
Copper has fallen to its lowest price since mid-2010 to $US3.03 per pound.