By The Guardian
Iron ore prices have plunged to a fresh six-year low as the commodity gets caught up in the fallout from China’s massive sharemarket plunge, with steel now reportedly cheaper per tonne than cabbage.
Iron ore prices in China plummeted more than 10% to $US44.59 a tonne on Wednesday night, their lowest level since May 2009.
At that price, most Australian miners would be producing at a loss, with the exception of low-cost giants Rio Tinto and BHP Billiton.
Miners have already been under pressure on the stock market: Fortescue Metals slumped more than 6% on Wednesday, while BHP and Rio each lost more than 3%.
Iron ore prices hit a low of $US47 a tonne in April this year before recovering to rise above $US64 a tonne in June.
IG Markets strategist Evan Lucas said that the price of steel – of which iron ore is a key ingredient – in China was so weak it was “now cheaper per tonne than cabbage”.
While copper jumped as the US dollar slipped, oil prices were also on the slide, with US benchmark West Texas Intermediate falling 68 cents to US$51.65 a barrel on Wednesday, its fifth day of losses.
Many agricultural commodity prices were also weaker, including cotton and wheat.
The slide in iron ore comes as China’s share market remains in freefall, even in the face of the government’s extraordinary efforts to calm investors.
China has suspended trading in more than half of the country’s listed stocks, banned short selling and new listings, and enlisted the help of the major stock brokers through a 120bn yuan ($A26bn) stabilisation fund.
But the moves have so far failed to stop the bleeding and the Shanghai Composite Index, which has lost more than 30% in less than a month, dived another 5.9% on Wednesday.