The price of iron ore, Australia’s biggest export, has continued to plunge as top customer China steps up moves to cut its steel output and reduce carbon emissions for the third straight month.
After hitting a record-breaking $US230 a tonne in May, the key steel-making material has had its value slashed in half and is now trading below $US110 a tonne, hammering the share prices of the ASX-listed mining heavyweights BHP, Rio Tinto and Fortescue.
Investment bank UBS on Friday lowered its iron ore price forecasts out to 2023 by about 10 per cent amid a slowdown in property activity in China and expectations the seaborne market would soon be oversupplied.
“The correction in iron ore prices has played out faster than expected,” analyst Lachlan Shaw said.
“We expect the iron ore market to swing into surplus in the second half of 2021, prices to fall below $US100 a tonne over the next few months, before averaging $US89 a tonne in calendar year 2022.”
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