Iron ore has finally slipped below the new US$40 per tonne watermark.<\/p>\n
This is a worrying new low for the market, as the iron ore futures fell under the US$40 per tonne price point, according to Bloomberg.<\/p>\n
The SGX AsiaClear contract price for January slumped to US$39.67 a tonne, and marks a return to prices not seen since before the Global Financial Crisis, in 2007.<\/p>\n
The MBIOI-58 Premium Index was even worse, ending the month at US$38.15 per tonne.<\/p>\n
Last month independent analyst Andy Xie forecast that the commodity would slip below US$40 per tonne<\/strong>, and will trade just above US$30 per tonne next year.<\/p>\n The former Asia-Pacific head economist at Morgan Stanley previously pointed to the steel industry reaching a crisis point, adding they needed to cut production to drive demand.<\/p>\n This new \u2018normal\u2019<\/strong> comes as the SteelIndex reaches its lowest point since records began nearly a decade ago, after the spot price at the Chinese port of Tinajin fell to just above US$43 a tonne.<\/p>\n The situation is not as dire right across the market, however, with Metal Bulletin recording a spot price of US$42.97 a tonne, which was still a fall overnight.<\/p>\n Conditions are likely to get worse as reports emerge forecasting more than 100 million tonnes of new iron ore supply will hit the market.<\/p>\n According to Fitch ratings, more than 145 million tonnes will be added to current supply levels over the next two years<\/strong>, with Gina Rinehart\u2019s Roy Hill iron ore mine getting closer to export as ships near its port.<\/p>\n These figures from Fitch are an additional 10 per cent on existing levels, and solidifies the likelihood of the iron ore markets lack of recovery in the near term.<\/p>\n \u201cThe closure of high-cost iron ore mines has been slower than we previously anticipated, despite the sharp fall in iron ore prices since 2014,\u201d Fitch said in its report.<\/p>\n \u201cGlobal demand, led by China, has also been weaker than we previously anticipated, and is likely to remain muted through 2016.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"