Iron ore’s winning streak has come to an abrupt halt with the commodity plunging 4 per cent.
At the end of the latest session, benchmark iron ore for immediate delivery to the port of Tianjin in China was trading at $US56.90 a tonne, down 3.9 per cent.
After hitting a record low of $US46.70 a tonne on April 2,iron ore made a rally from April 16 which saw it add 26.7 per cent to its price.
But as most analysts predicted, the surge has been short-lived as market fundamentals remain off balance.
These fundamentals include a slowing growth rate in China leading to weakened steel production and an oversupply of iron ore.
News out of China yesterday that the government will lend further support its high-cost producers is also set to rock sentiment.
With a glut of new supply hitting the seaborne market – produced mainly by the big three miners Rio Tinto, BHP Billiton, and Vale – it was hoped Chinese ore producers would shut down.
However China has come out in support of the industry, vowing to cut taxes and business costs for the troubled sector.
The China Iron and Steel Associationhas called for the government to deliver even more help.
“We are not on a level playing field with global miners,” the body’s executive vice chairman, Zhu Jimin, said.
“We need to lessen the burden on our iron ore mines. We need a batch of mines that can survive even if the global price of iron ore falls to $US60.”
A critic of the way the major iron ore miners have ramped up production during a time of market instability, FMG’s founder and chairman Andrew Forrest has again hit out at the pair.
“If we don’t get responsibility coming into the future actions and the current statements of the very multinational companies that derive their fortunes from our own land then the iron ore price will continue to fall, the budget will be thrown into jeopardy, the deficit will grow and our standard of living will fall,’’ Forrest told broadcaster Alan Jones yesterday.
“And it’s all completely avoidable. None of this had to happen.’’
The comments by Forrest came on the same day news broke that FMG would start implementing roster changes at its Pilbara operations, a move which could lead to job losses.