Australia’s biggest miners face the prospect of iron ore staying flat for longer, after prices for the country’s most lucrative export crashed more than a quarter this year amid uncertainty about China’s economic outlook.
After hitting 18-month highs above $US140 ($215) a tonne in January, the price of iron ore has plunged sharply in recent months, slumping to near $US100 ($153) by mid-March, due to signs of softer demand from the world’s biggest steel producer, China. Port inventories and stockpiles of iron ore at China’s blast furnaces are rising, suggesting steel output from the Asian powerhouse may start to slow.
Analysts believe iron ore prices could now remain near $US100 for months ahead.
Westpac Bank’s commodity team, in a note on the sector, said China’s steel mill stockpiles have jumped to their highest level since February last year, above seasonal averages, and iron ore port inventory has risen in 11 of past 12 weeks, up 30 per cent from September.
The bank is forecasting iron ore prices will fall below $US100 a tonne between July and September and may slide below $US90 in the final quarter of this year.
