A sudden weakening in global iron ore prices last week now sees the commodity on the verge of a correction (a fall of 10% or more from the most recent peak) as China’s iron and steel lobby started whining about the impact of the sharp run-up in prices.
The fall – especially the 6% slump on Friday – will see shares in the big Australian iron ore exporters come under pressure today.
Friday saw BHP shares end at $US41.29, up 0.3% for the week but down on the day; Rio Tinto shares ended up 0.1% over the week after dipping to end at $103.93.
Shares in Fortescue Metals which is the most exposed of the major miners to the vagaries of the iron ore price fell more than 2.4% last week to close at $8.80 after a 4.3% slump on Friday.
Shares in Vale, the big Brazilian miner, and rival to the Australian trio saw its shares lose more than 2.3% over the week. Its shares lost 1.9% on Friday in the wake of the sell-off in Asian iron ore markets.
The Metal Bulletin’s 62% Fe price fell sharply on Friday to $US114.81 a tonne, down 3% over the week and 9% from Tuesday’s more than five-year peak of $US125.77 a tonne.
The price of other iron ore grades – 65% Fe and 58% Fe also tumbled from Tuesday to Friday.
Late last week Chinese traders took fright at the whingeing about the 80% surge in iron ore prices in the past year.
Bloomberg reported that the China Iron & Steel Association urged the government to maintain order in the global iron ore market after prices surged to a five-year high following a supply squeeze.
The association said he had requested authorities look into the gains. Chinese yuan iron ore futures fell sharply and that drove Friday’s $US7.22 slide in the 62% Fe index.
The Association “is reporting relevant problems in the industry to government ministries and regulators, urging a stronger investigation and supervision to maintain normal iron ore market order,” Vice Chairwoman Qu Xiuli said at a conference in Shanghai on Friday.
The group wants to see prices back at “reasonable levels,” she said, according to Bloomberg.
