Watch iron ore stocks today on the ASX, they will come under more pressure after the world spot price dipped under $US60 a tonne in a brutal 4.5% slide.
Traders said news of the downgrading of China’s growth target for this year to around 7% hit sentiment, even though the cut (from 7.5% for 2014) has been known for months.
But what really added to the negative sentiment was the usual monthly report showing another record shipment of iron ore to China from Port Headland, the world’s biggest iron ore port, in WA.
The futures market had the ASX starting with a small 4 point gain after a modest night on Wall Street overnight, while the Aussie dollar lurched under 78 US cents to trade around 77.72 in early Asian dealings this morning.
But that was before the fall in iron ore prices, to $US59.30, had registered, near the all time low (under the current system) hit late last year.
Trading on the ASX yesterday saw Rio Tinto drop 2% to $61.15, while BHP Billiton dropped half a per cent to $33.16.
And iron ore miner Fortescue Metals Group was flat at $2.29, after announcing a $2.5 billion debt refinancing deal.
The overnight drop in iron ore prices came after a steady series of small falls in the past week or so because of the disruptions caused by the Lunar New Year/Spring Festival break in mid-February. The iron ore market usually takes a fortnight to recover after that week-long break.
Wood Mckenzie, the big UK based commodities forecaster reckons China will slow its iron ore buying this year. In 2014 China bought 100 million extra tonnes (to a total of around 832 million). Wood Mckenzie reckons only an extra 30 million tonnes will be bought this year, putting further pressure on prices with more extra capacity to come onto the market, especially in Australia and Brazil.
The data from Port Hedland’s Ports Authority showed exports to China in February rose marginally to 30.25 million tonnes from 30.15 million tonnes in January.
But with February having only 28 days, the amount of ore shipped each day rose to 1.08 million tonnes from 0.97 million in January.
Shipments to China were 42% higher than in February 2014 as BHP, Rio and Fortescue continue to boost production and sales.
Overall shipments of iron ore from Port Hedland rose to amounted to 35.7 million tonnes in February against 36.8 million tonnes in January and 37.1 million in December.
