04/06/14 – Iron ore producers say price may go even lower
After the iron ore price hit a fresh 20-month low on Friday, iron ore producers aren’t ruling out a further drop in prices but insist the price weakness should be short-lived.
Prices slumped 4.1 per cent on Friday to $US91.80 a tonne, their lowest since September 2012.
They are now down by almost a third since the start of the year.
While all Australia’s iron ore miners are affected by the weakness, giants BHP Billiton and Rio Tinto included, smaller players with higher costs are the worst hit.
Fortescue Metals Group, the country’s third-biggest producer, Atlas Iron and Mount Gibson Iron say a further decline past the $US86.90 a tonne low of September 4, 2012, is not impossible.
That would set prices on a trend down to depths not seen since 2009.
But demand remains firm, and the outlook remains positive in the medium term, they say.
”History dictates that the price could yet go lower, but our long-standing view is that while the price might be volatile it can be a healthy price, and as a result Atlas has a strong niche in the Pilbara for the long term,” said Ken Brinsden, managing director at Atlas Iron.
Spot prices on Friday sank 4.1 per cent at Tianjin port in China, the world’s key market for global iron ore trade. China accounted for about two-thirds of total imports last year, up from just a quarter of trade a decade earlier.
Friday’s price drop took the decline so far this year to almost a third, including a 13 per cent slump in May, when it crashed through to double figures for its sixth straight monthly decline.
Source – The Sydney Morning Herald