By Greg Roberts
(Australian Associated Press)
A fall in the iron ore price to below $US60 a tonne has hit the share prices of Australia’s miners.
The fall to its lowest level in five weeks came after Australia’s Department of Industry and Science sharply cut its price forecast for 2015 from $US60.40 a tonne to $US54.40.
Many analysts believe it could tumble well below $US50.
“China’s steel production is forecast to contract in 2015 and 2016 as the seaborne supply of iron ore increases,” the department said in its latest quarterly update.
The Steel Index reported that iron ore closed at $US59.30 on Tuesday, down 1.98 per cent from $US60.50 while the Metals Bulletin had iron ore closing at $US59.35, down 3.2 per cent.
The share prices of Australia’s big iron ore miners were all falling on Wednesday.
BHP Billiton, the world’s largest miner, closed down 40 cents, or 1.48 per cent, to $26.65, following a three per cent fall in its London listing and a long way from the near $36 level it was at last August.
Rio Tinto, the world’s second largest miner, was 74 cents, or 1.38 per cent, weaker at $53.01 and Fortescue Metals had dumped eight cents, or 4.19 per cent, at $1.83.
All those miners recovered slightly from heavier losses earlier in the session.
The government’s forecast cuts come against a background of concerns that the gains in the spot iron ore price over recent months may not be sustainable given forecast increases in seaborne supply, including Gina Rinehart’s new mine.
Australia is the world’s largest iron ore exporter and the steelmaking commodity is its biggest exporter earner, meaning the price falls are hurting the nation’s wealth.
The government was forecasting a price this year of $94 in January but by April the price had fallen to $46.70.
The commodity’s main market, China, is giving Australia little comfort with the Shanghai stock exchange plunging 19 per cent in less than three weeks – including 7.4 per cent last Friday.
The country’s growth is believed to have fallen below the government’s seven per cent target.