Iron ore prices are sliding and Australian investors had better wake up. They have slept (or ignored) most of the 22% slide in the global spot price in the past three weeks – with most of that happening since the start of last week.
The sell off is being driven by the crackdown on speculators by Chinese regulators and markets, a move that has been intensified in the past 10-days.
The spot price plunged more than 5% yesterday to $US54.99, according to Metal Bulletin data. That was after last week’s 12% slide.
But the prices of key miners are still mostly higher over the past month – BHP shares are up 11%in the last month (and that includes the big sell-off caused by news of a huge damages suit against it, Vale and Samarco in Brazil). Rio shares are up 7%, as are Fortescue shares.
But yesterday saw some belated recognition of the slide and its potential impact.
Rio shares fell 8% in London, Brazil’s Vale dropped nearly 8% in New York, while shares in US miner, Cliffs Natural Resources plunged 18% at one stage.
Fortescue shares fell more than 2% yesterday, Rio shares sank more than 7% in New York overnight, while BHP shares were off more than 5%.
That weakness will add to the 17 point fall in the ASX 200 futures market this morning.
A small positive for some miners though has bee the equally sharp fall in the value of the Aussie dollar – which was trading around 73.15 just after 7am this morning in Asia.
The fall yesterday was preceded by another big sell off on futures markets in Singapore and Dalian in China.
Bloomberg reported that the SGX AsiaClear contract for June settlement slid as much as 9.4% and in Dalian they fell 7.1%, retreating alongside contracts for steel reinforcement bar and coking coal.
The sell-off in China saw the country’s share markets crunched for a second day in a row yesterday. Following the market’s nearly 3% slump on Friday, the CSI300 index dropped 2.1%, to 3,065.62, while the Shanghai Composite dropped 2.8%.
Wall Street closed mixed as the run up in oil prices on those bad Canadian fires ran out of puff and world prices turned lower. The S&P 500 and Nasdaq rose, but the Dow was lower. Gold fell $US28 or more than 2% to $US1,265 an ounce. Silver fell by more than 2%,while oil prices dropped by over 3% to just over $US43 a barrel.
