Author: Paul Ploumis
29 Aug 2014 Last updated at 06:13:00 GMT
WASHINGTON (Scrap Monster): Latest data shows 2 years of constant gutter for the metal, and is moving fast towards to the lower line of the financial crisis.
The iron ore stored for delivery at the Tianjin port in China, is at present being traded at 87.30 dollars per tonne. It declined one percent from the previous session, which was 88.20 dollars per tonne. Iron ore lost about 5 percent this week and lost a total of 35% this year.
Records show that the benchmark price of iron ore is 60 cents, much lower than the ratings in September 2012. If the decline of prices continues, sooner the commodity will be lower than 86.70 dollars per tone, it will reach at lowest ebb since the year 2009.
The reason behind this overnight fall of Iron ore prices are estimated to be, the sudden production expansion by iron ore giants, BHP Billton, Fortescue Metal Group, Vale and Rio Tinto
But as the extend of the downfall exceeded more than expected, there has been a serious damage to share prices of the heavy weight sector, along with, UK listed stock of Rio Tionto sinking 4 percent, and BHP’s stock declined 3 percent
Both Rio Tinto and BHP together lost 1.5 percent, which represents a sharper decline, than shown in other local sessions. At the same time Atlas Iron, Fortescue Iron and BC iron lost 7 percent, 3 percent and 4 percent respectively.
Even though, the decline in the price of iron ore will definitely affect the giants, especially Rio Tinto, but their low cost production will clearly safeguard them from painful; losses compared of their Chinese rivals. The latest expansion in production is the part of pressurizing their competitors especially Chinese producers.
Even though atlas steel announced a full year profit, it failed to cheer almost all the investors. The major reason is the knowledge of nearing breaking point as the iron prices are declining. Even so, some of the investors were relieved by the short term recovery.